Corporate India's earnings growth to slow on rising costs - Moody's Ratings
This story was originally published at 15:21 IST on 18 May 2026
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--Moody's: India earnings growth to slow down over next 12-18 months
--Moody's: High input costs, supply-chain disruptions to hit consumer demand
--Moody's: Rupee depreciation to hit consumer demand
--Moody's: Corporate credit quality to remain stable on strong balance sheet
--Moody's: Corporate credit quality to remain stable on internal cash sources
--Moody's: Indian cos to defer capex, delay execution of plans on W Asia war
NEW DELHI – Moody's Ratings Monday said that the earnings growth of India's non-financial corporate sector is expected to slow over the next 12-18 months because of rising input costs, supply-chain disruptions, and currency depreciation, which in turn are expected to weigh on consumer demand. The credit qualities of these companies, however, is expected to remain stable as their capital expenditure can be funded through stronger balance sheets and internal cash sources, Moody's Ratings said.
"The US-Iran conflict has exposed India's non-financial corporates to these risks given their reliance on imports of key commodities including crude oil, natural gas, cooking fuel and fertilizers," the rating agency said in a press release. It expects companies to deprioritise capacity expansion in favour of liquidity preservation and to strengthen their balance sheets.
"Capital spending growth is likely to moderate to around 4% over the next two years, from the 11% compound annual growth rate recorded between fiscal 2022 (fiscal year ended 31 March 2022) and fiscal 2026," Moody's Ratings said, adding that it expects companies to spend around INR 4.6 trillion. This, it said, is a substantial amount even if companies were to defer their projects.
Steady deleveraging and growth in scale have helped strengthen the earnings capacity and financial flexibility of India's non-financial corporates, Moody's Ratings said. "While leverage trends will vary across sectors, overall credit quality will likely remain stable. Rated companies' aggregate leverage will remain between 2.2x-2.4x over the next 12–18 months," the rating firm added.
INPUT COST PRESSURE
Corporate India so far, during their commentaries for the March quarter, have lamented the rise in commodity costs due to the ongoing war in the Persian Gulf. The landed costs of imports have also increased because of the rapid depreciation of the rupee against the dollar.
"Where companies are unable to raise prices, higher input costs will compress margins; in both cases, elevated costs are likely to slow corporate earnings growth. At the same time, sustained high commodity prices and continued rupee depreciation will limit the scope for further interest rate cuts," Moody's Ratings said.
Sectors which are most likely to bear the brunt of these developments include automobiles, airlines, retail and hospitality companies, steel, metals and mining, among others. End
Reported by Anand JC
Edited by Akul Nishant Akhoury
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