India Inc to see tepid revenue growth of 4-6% in Q1 FY26 as IT, steel drag earnings: Crisil 

The April–June revenue growth of Indian companies is likely to trail that of the past two quarters, with a tepid growth rate of 4–6%, dragged down by key sectors such as IT, steel, and power, according to a report published by Crisil Intelligence on Monday. The sectors collectively account for a third of the 600 companies that Crisil analysed. However, the report also suggests that strong performance is on the cards for sectors such as pharmaceuticals, telecom, aluminium, and airlines.

The strong performance was on the back of higher volumes in sectors like airlines—which is expected to have grown by 10–12%; steel—which is expected to have grown by 7–9%, compared to a price rise of 3–5%, and a fall of 2–4% respectively. The report also identifies that rural growth has seen recovery, driven by growth in the FMCG and tractors sectors. Some of the other contributors to the rebound in rural growth include moderating food inflation, a favourable monsoon forecast, and a good rabi harvest.

However, one of the major sectors responsible for the overall tepid revenue growth was IT services, whose profitability, according to Crisil, has likely declined by 100 basis points year-on-year to about 21%. The profitability was affected by geopolitical uncertainties, primarily driven by U.S. tariffs, which led to a deferral of IT spending on projects. This likely led to slower activity in the sector, which contributes 14% to the mix of companies that Crisil analysed. The sudden plunge in demand and project deferrals, induced by U.S. tariffs and the absence of currency-related gains, has also hit Ebitda margins.

In the large-cap IT space, Infosys is the only outlier, which reported a sequential and year-on-year increase of 2.6% and a year-on-year growth of 3.8%. Peers such as TCS, Wipro, and TechM experienced a decline in their constant currency revenue during the quarter, both sequentially and year-over-year. HCLTech, however, saw a sequential revenue decline of 0.8% in constant currency terms, but it was up 3.7% compared to the first quarter of the previous fiscal year.

Another sector that has been a laggard, according to Crisil, is the steel products sector, which contributes 9% to the revenue mix. Maintenance shutdown at major steel mills and an on-year price decline are cited as the major reasons for steel’s revenue to have registered a sequential decline of 4%. The power sector, which contributes 8% to the revenue mix, has seen a sequential decline of 2% and a year-on-year decline of 8%, driven by a drop in demand due to early monsoon and lower merchant prices.

The sectors that outshine others, though, include pharmaceuticals and telecom. Pharmaceuticals, which account for 5% of the revenue mix, have benefited from strong export demand and a stable domestic market. Telecom services, with a 3% contribution to the revenue mix, have benefited from higher realisations due to costlier subscription plans.