More Stories

Informist, Thursday, Mar. 6, 2025

 

HYDERABAD - Earnings of India Inc. are expected to grow at 7-8% in 2025-26 (Apr-Mar) against the 6% growth in FY25 led by volume-driven consumption growth in key consumer sectors, Crisil Ltd. said in its India Outlook report on Thursday. The projected growth will mainly be led by sectors such as organised retailing, fast-moving consumer goods, consumer durables, airlines, and automobile sector, mainly two-wheelers, the research firm said.

 

"Aggregate growth of consumption sectors (with a 21% share in corporate revenue) is expected to outpace nominal GDP growth, led by the twin effect of revised tax slabs announced in Union Budget 2025-26, which will increase disposable income, and a 25 bps (basis points) rate cut announced by the RBI (Reserve Bank of India) in February," Crisil said.

 

While revenue growth projections are moderate, corporate India's earnings before interest, tax, depreciation and amortisation margin are expected to improve 50 bps on year in FY26 due to benign commodity prices, Crisil said.

 

Crisil said the 6-7% projected rise in salaries in FY26 along with additional savings due to changes in the tax bracket will likely increase consumer demand, mainly aided by individuals with annual income of INR 700,000 to INR 1.8 million.

 

Extreme weather conditions during the monsoon season, tariff war initiated by the US, and global growth environment are some of the key risk factors that would affect the corporate performance of India in FY26.

 

"Notably, rural demand will support growth of consumer staples. The growth in these sectors will be largely volume-led. Commodity sectors, especially metals, will continue to drag down growth due to prevailing pricing pressure. Also, growth in the construction sector will remain tepid," the report said. Crisil said that while it expects a normal monsoon, there is risk of La Nina, which may impact crop yields in some regions.

 

"The La Nina effect, an extreme weather pattern, persisting through early calendar year 2025, can impact crop yields. In such a case, most of India may see above-normal rainfall, except the extreme north and northeast regions, where below-normal rainfall is likely, as announced by the Ministry of Earth Sciences in December 2024," Crisil said.

 

India's corporate revenue growth in FY26 will mainly led by volume growth and 11 out of 13 key sectors will see volume driven expansion, outpacing price increases, Crisil said. The exception will be telecom and passenger vehicles, which may see growth led by price increases and consumer shift towards premium products and services leading to higher realisation.

 

The research firm expects continuous shift towards sport utility vehicles to help realisations of auto companies leading to 5% growth in this segment, and 9% volume growth in two-wheeler sales to aid the sector's revenue in FY26. Besides healthy rural demand for two-wheelers, differed replacement demand will help the sector, the report said.

 

The organised retail industry, which accounts 60% of the consumer sector, is expected to witness healthy revenue growth because of rising penetration into Tier-2 and Tier-3 cities and improved consumer spending, the report said.

 

The airline industry, which accounts for about a fourth of the consumer sector, will continue to be driven by strong traffic growth, led by international passenger traffic and increase in supply as fleet availability improves. This will result in volume growth of around 10% for the airline industry in FY26, Crisil said.

 

The steel industry's revenue is anticipated to rebound, driven by robust demand, though pricing pressure may continue till the imposition of safeguard duties to restrict imports, the report said. Overall revenue for steel sector in FY26 will be driven by 10% volume growth.

 

For the cement sector, demand momentum is set to improve in FY26 with traction from infrastructure and rural housing segment, leading to 7% on-year volume growth.

 

Crisil said given the tariff war initiated by the US and the subdued global growth environment, India's goods exports may face further headwinds in FY26 and this may add downside risks to revenue of sectors such as textiles, pharmaceuticals, and solar modules. On the export front, information technology sector is expected to see 100 bps increase in revenue growth to 5-7% in FY26.

 

Crisil said the positive momentum in rural consumption will sustain in FY26 led by better farm practices and higher crop yields, besides various welfare schemes. The steady spending by the Centre will also continue, helping the growth momentum, though states are not matching the pace in spending on infrastructure projects.  End

 

Reported by Narayana Krishna

Edited by Ashish Shirke

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.