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Informist, Thursday, Jun. 18, 2026

MUMBAI – Higher crude oil prices and a rise in overall input costs due to the rupee's depreciation are likely to hit the operating profit margin of India Inc by 100-150 basis points on year in the June quarter, according to a report by ratings agency ICRA Ltd. India's corporate sector is expected to witness moderation in revenue growth to mid to high single digit in Apr-Jun from 13.2% on-year growth in the March quarter, ICRA said.

The ratings agency expects the credit metrics to soften, with an estimated interest coverage ratio of 4.8-5.0 times in the June quarter, against 5.8 times in Jan-Mar, despite stable cost of funds and leverage. Global trade flows, logistics costs and demand sentiment in key export markets, which are affected due to the war in West Asia, are likely to act as a key overhang for corporate earnings in the near term, ICRA said. 

Sectors related to travel and tourism, such as aviation and hotels, targeting foreign tourists, LPG-dependent industries such as ceramic tiles and quick-service restaurants are likely to have a second-order impact owing to the geopolitical conflict. Moreover, development of El Nino conditions could potentially disrupt rural demand, impacting revenues of a large section of the corporate sector, which had posted healthy revenue growth in the March quarter, the agency said.

While the aggregate profit margins of India Inc. are likely to be affected due to high fuel, logistics, and packaging costs and rupee depreciation, the margin pressure could be partially offset by price revision, ICRA said. The price revision will either be partial or lagged as an abrupt price hike may impact demand and competitive position, it said. "Focus on fixed cost optimisation and efficiency improvement by organised players amid a challenging operating environment and the benefits arising from INR depreciation for exporters are expected to cushion the margin pressure at an aggregate level, to a certain extent," it added.

Expectations of a below-normal monsoon hitting rural demand have affected the overall domestic demand in the June quarter, Kinjal Shah, senior vice president and co-group head-corporate ratings at ICRA, said. "While stable income trends are likely to support urban consumption to some extent, the overall demand environment is expected to remain challenging due to inflationary pressure amid a surge in crude oil prices and INR depreciation, constraining volume  growth in consumption-oriented sectors," she said. Shah expects investment-led segments, including capital goods and infrastructure, to benefit from a rising order book from some of the private sectors, partially offsetting the broader consumption slowdown.  End

US$1 = INR 94.21

Reported by Simran Rede

Edited by Avishek Dutta

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