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Informist, Thursday, Aug. 27, 2026

MUMBAI – The interest coverage ratio of listed manufacturing companies increased to 10.2 for the June quarter from 9.5 for the trailing quarter, the Reserve Bank of India said Thursday in a report on the earnings performance of the private corporate business sector for the latest quarter. The listed non-information technology services companies also posted an increase in interest coverage ratio to 2.6 times from 2.3.

Considered to be a measure of debt servicing capacity and financial viability of a company, the interest coverage ratio is calculated as the ratio of earnings before interest and tax to interest expenses, according to RBI. An increase in the ratio is considered to be an improvement in the debt servicing capacity.

For manufacturing companies, a 4.4% on-year rise was seen in interest expenses for the June quarter as compared to 2.4% increase in the trailing quarter, the RBI data showed. But since the earnings before interest and taxes growth of 17.4% for the June quarter was much higher than 7.7% in the March quarter, the manufacturing companies posted a better interest coverage ratio.

The central bank said with global supply chain disruptions during the June quarter, the raw material costs of manufacturing companies rose to 27.5% as against 18.3% for the trailing quarter. However, the raw material to sales ratio declined marginally to 58.1% from 58.5%.

RBI said pricing power lagged the increase in operating profit growth on year of manufacturing companies to 21.3% for the June quarter from 9.4% for the March quarter as this took place amid a significant increase in input costs. The sales growth of manufacturing companies at 21.4% for the June quarter was also higher than 13.9% for the trailing quarter, RBI said. "This acceleration was majorly driven by the automobiles, petroleum, and electrical machinery industries," RBI said.

The sales growth of IT companies was also higher at 14.8% for the June quarter from 9.9% for the March quarter. There was a decline in the sales growth for non-IT services companies to 19.7% from 20.3%, the RBI data showed. The central bank said the non-IT services companies' sales growth was "mainly driven by wholesale and retail trade industry."

On the net profit performance, manufacturing companies posted a 9.3% growth for the June quarter, much higher than the 0.5% increase for the trailing quarter. For the June quarter, the non-IT services companies saw their net profit increase 5.4% on year, while IT companies posted a 29.8% net profit growth as against 24.5% in the March quarter.  End

Reported by Rajesh Gajra

Edited by Deepshikha Bhardwaj

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