India Inc.'s revenue growth likely accelerated to 11-11.5% in Q1FY27, fastest in two years: Crisil

India Inc.'s revenue growth is estimated to have accelerated to 11-11.5% year-on-year in the first quarter of FY26-27, marking the fastest pace in two years, as strong domestic demand and price hikes offset the impact of higher input costs triggered by the West Asia conflict, according to a report by Crisil.

The estimated growth compares with 9.6% in the preceding quarter, based on Crisil's analysis of more than 400 listed companies across 47 sectors, excluding banking, financial services, and oil and gas. The sample accounts for nearly half of India's listed market capitalisation.

The report said rising crude oil and natural gas prices, coupled with supply disruptions in West Asia, pushed up fuel, freight, packaging and feedstock costs. However, resilient domestic demand enabled companies across several sectors to pass on a part of the higher costs to consumers. "For much of the past two years, revenue growth was powered largely by volume. But this time around, pricing was the primary driver, contributing more to revenue growth than volume in sectors such as aluminium, steel, cement, airlines, fertilisers, and gems and jewellery," said Sehul Bhatt, Director, Crisil Intelligence. He added that while growth was uneven across industries, it was broad-based enough to lift aggregate corporate revenues.

Automobiles lead growth

The automobile sector emerged as one of the strongest performers, with revenue estimated to have risen 22-24% year-on-year, supported by GST-led demand, healthy passenger vehicle and two-wheeler sales, stronger commercial vehicle demand, export growth and selective price increases.

White goods also benefited from GST rationalisation, while telecom services gained from premiumisation, higher data monetisation and migration to postpaid plans. Revenue in the telecom sector is estimated to have increased 10-11%, while power generation is expected to have recorded 8-10% growth, driven by an estimated 8% rise in peak electricity demand.

Pricing boosts metals, cement

Pricing gains played a key role in sectors such as aluminium, steel, cement, fertilisers, chemicals, tyres and gems and jewellery.

Primary aluminium producers are estimated to have posted 51-53% revenue growth due to supply disruptions, tighter imports, higher regional premiums and capacity additions. Steel companies benefited from stronger prices, stable domestic demand and improved exports.

Cement companies are estimated to have recorded 6-8% revenue growth after offsetting higher costs through price hikes, while fertiliser companies are expected to have posted 8-10% growth, aided by strong seasonal demand and higher prices.

Construction companies, however, remained under pressure, with revenue growth estimated at just 13%, as geopolitical disruptions delayed project execution and revenue recognition despite healthy order books.

Consumer demand remains resilient

Consumer-facing sectors continued to show resilience. FMCG companies are estimated to have recorded 6-7% revenue growth, supported by selective price increases, although higher packaging, logistics and food costs likely weighed on profitability.

Among export-oriented sectors, pharmaceuticals outperformed with estimated revenue growth of around 12%, driven by domestic demand, new product launches and exports to semi-regulated markets. In contrast, textiles and processed food manufacturers faced pressure from higher freight costs and longer shipping schedules.

IT services companies posted an estimated 5% revenue growth, largely aided by favourable currency movements as enterprise spending remained cautious.

Margins under pressure

Despite robust revenue growth, profitability weakened as companies could only partially pass on higher costs. Aggregate earnings before interest, tax, depreciation and amortisation (EBITDA) margins are estimated to have contracted by 75-100 basis points year-on-year.

"Margin pressure was most pronounced as low-cost inventory buffers depleted and replacement costs increased," said Pushan Sharma, Director, Crisil Intelligence. He said companies faced rising costs for industrial diesel, commercial LPG, freight, packaging and feedstock, with the sharpest impact seen in sectors where pricing power was limited or cost escalation was sudden.

Airlines witnessed the steepest decline in profitability, with EBITDA margins estimated to have fallen by nearly 1,000 basis points due to higher aviation turbine fuel costs and softer passenger traffic.

Fertiliser manufacturers were affected by rising prices of gas, ammonia, sulphur and phosphoric acid, while pharmaceutical companies faced higher raw material, power, and logistics costs alongside pricing pressure in the US market. Tyre manufacturers also saw margins decline by 200-300 basis points amid higher natural rubber and synthetic rubber prices.

By contrast, sectors with stronger cost pass-through mechanisms, including power generation, telecom services, hospitals, and parts of the metals industry, were better placed to protect margins.

According to Crisil, corporate performance in the coming quarters will depend on companies' ability to implement further price increases without hurting demand, maintain sales volumes while recovering higher costs, and benefit from easing fuel, freight, and raw material prices.