Earnings of India Inc remain uneven in June quarter; but these four sectors posted over 15% growth in net sales

Net sales of India Inc witnessed a sharp slowdown during the first quarter of FY26. Data shared by Bank of Baroda’s Economic Research Department showed that the net sales of a sample of 2,545 firms grew by just 4.9% in Q1 FY26 against a growth of 10.6% in the same period a year ago. Meanwhile, expenditure growth stood modest at 4.3% compared with 8.7% in Q1 FY25. Interest costs registered a growth of 9.6% in Q1 FY26, compared with 23.8% in Q1 FY25.

Interestingly, since February 2025, the RBI has lowered the repo rate by 100 basis points. On the other hand, profit growth remained stable at 11%.

“RBI’s decision to lower rates resulted in significant deceleration in interest costs for companies, with several sectors noting an improvement in their debt serviceability capacity. However, the performance is not uniform across industries, with a few sectors exerting a greater influence on the aggregate sample. This is especially true for crude oil and the BFSI segment. However, management commentaries suggest that a recovery is underway, and the outlook remains largely positive,” Bank of Baroda’s Economic Research Department said in a report.

The report further added that a normal monsoon, festive demand, low inflation, reduction in interest rates as well as income tax benefits should help support a recovery in demand. Infrastructure and linked sectors will continue to benefit from the government’s capex push. Export-oriented sectors have navigated the challenging external environment reasonably well and remain well-positioned to face any future challenges. At the same time, services-linked industries continue to post a steady growth performance. This suggests that one can expect a gradual improvement in the next few quarters.

For the non-BFSI segment, growth in net sales was recorded at 3.6% in Q1 FY26 against 7.2% in Q1 FY25. Expenditure and interest costs were lower, resulting in an improvement in profitability. For the ex-BFSI companies, PAT growth was 13.3% in Q1 FY26, compared with 5.7% in Q1 FY25. However, these results have been skewed by a single large company in the crude oil sector. “If we exclude it, the net sales growth for the non-BFSI segment stands at 4.7% (7.2% in Q1 FY25), while PAT growth was 8.3% in Q1 FY26 versus 7.1% in the same period last year,” Bank of Baroda’s Economic Research Department said.

As many as 4 sectors reported growth in net sales exceeding 15%. These were diamond and jewellery, electricals, diversified manufacturing and hospitality. A total of 5 sectors registered growth in net sales between 10-15%, with FMCG and drugs and pharmaceuticals sector featuring as the biggest contributor.

In the concluding remarks, Bank of Baroda’s Economic Research Department in the report said that, continuing a trend seen over the last few quarters, results of India Inc continue to paint the picture of a gradual yet uneven recovery. While the financial performance of some companies continues to be impacted by certain idiosyncratic factors, the underlying theme remains of strength and resilience.

“Corporates remain optimistic on future demand prospects, with several commentaries noting a measured recovery in urban demand. This is likely to be aided by the early onset of the festive season. Rural demand has remained steady and a positive outlook for the agriculture sector amidst normal monsoon, higher kharif sowing and ample reservoir storage also bodes well for future prospects,” the report said, adding exports-oriented industries can face some uncertainty due to the higher tariffs, however, they seem to be well prepared to absorb or mitigate any shocks.

“Overall, we should see an improvement in India Inc.’s financial performance as economic activity picks up. Recent high-frequency indicators, particularly the latest PMI readings also point towards an improvement in domestic manufacturing and services sector activity,” it said.