Resilient India Inc: Indian companies to see stable growth in Q1 FY26; railway & defence related cos projected for significant uptick

Indian companies are expected to register stable revenue growth in the April–June quarter of the current financial year, lifted by strong domestic demand, a report by ratings agency ICRA released on Monday said.However, lingering geopolitical tensions are likely to weigh on sentiment, particularly for export-driven sectors.ICRA projects operating profit margins for the first quarter of FY26 to remain steady at 18.2–18.5%, continuing a trend of gradual recovery seen in recent quarters.The improved profitability is also being supported by a fall in interest costs, following cumulative repo rate cuts of 100 basis points, which in turn is expected to boost India Inc’s interest coverage ratio.“Given the uncertain global environment, ICRA expects the private capital expenditure cycle to remain measured,” said Kinjal Shah, senior vice president at ICRA.“However, certain sunrise sectors such as electronics, semi-conductors and niche segments within the automotive space like electric vehicles will continue to see a scale-up in investments."Shah also noted that companies connected to the Indian Railways and defence sectors are poised to see significant revenue and earnings growth, as their strengthened order books begin to turn into revenues and earnings.

"India Inc is expected to report stable revenue growth in Q1 FY2026 supported by resilient domestic demand,” ICRA said.ICRA noted that rural demand is likely to stay strong, while urban consumption is expected to rebound, aided by recent income tax cuts and a drop in food inflation.Despite this, ICRA cautioned that export-oriented sectors including agrochemicals, textiles, auto components, polished diamonds, and IT services are likely to face continued pressure due to weak global sentiment fuelled by ongoing geopolitical instability.