- India Inc's underlying earnings grew strongly in Q1FY27 excluding BFSI and crude sectors
- Corporate sales rose 17.5% YoY and profits increased 23.7% YoY in Q1FY27
- Consumption and manufacturing sectors supported robust corporate earnings growth
India Inc delivered a stronger underlying earnings performance in the June quarter (Q1FY27) than the headline numbers suggest, with corporate sales and profit growth accelerating sharply after excluding the BFSI and crude oil sectors.
For a sample of 2,623 companies, sales grew 17.5% year-on-year (YoY) in Q1FY27, compared with 5% in the year-ago quarter. Profit growth also accelerated to 23.7% from 7.3% in Q1FY26, pointing to a broad-based improvement in corporate performance.
Bank of Baroda economist Aditi Gupta's analysis revealed that the improvement came despite elevated commodity and currency volatility and higher operating costs during the quarter.
ALSO READ: Financial Stocks Could Be Next Market Winners As FPI Selling Eases, Says JPMorgan's Rajiv Batra
Consumption, Manufacturing Engines Stay Strong
The underlying performance was particularly encouraging as companies managed higher input costs through a mix of calibrated price increases, supply-chain changes, inventory management and cost optimisation.
The report said the strong sales growth, despite higher prices, indicates that underlying growth momentum remains intact. Both consumption and manufacturing continued to support India's corporate earnings performance.
Across the broader sector universe, almost all segments recorded an improvement in sales. Profit growth also improved across most sectors, with consumer-oriented industries and crude oil being notable exceptions.
Autos, FMCG See Demand But Margins Squeezed
Consumer-facing sectors continued to see healthy demand, although profitability remained under pressure from higher input and logistics costs.
ALSO READ: Auto Stocks In Focus: M&M Leads CLSA's Four Picks Ahead Of Festive Season
FMCG companies reported strong sales growth, supported by rural demand and continued premiumisation in urban markets. However, elevated palm oil and other input costs weighed on profitability.
Autos also saw steady sales growth, with smaller cars gaining traction alongside continued demand for SUVs and mid-sized vehicles. EV penetration continued to rise, while both urban and rural markets showed traction. However, higher commodity, logistics and energy costs, along with rupee depreciation, weighed on margins.
Where The Earnings Momentum Is Strongest
The report flagged continued strength in infrastructure, real estate, power and export-oriented industries.
Infra-related sectors benefited from sustained government capex, while real estate demand remained strong, particularly in premium housing and data centres.
Power companies benefited from strong summer demand, with higher volumes and improved realisations supporting profitability.
Export-oriented sectors such as textiles, chemicals and diamond and jewellery also performed well on both sales and profit, with the weaker rupee providing some support to export competitiveness.
Crude Remains A Drag On Earnings
The petroleum sector continued to distort the broader corporate earnings picture. Global crude averaged around $97 a barrel in Q1FY27, against $67 a barrel a year earlier, sharply raising raw-material costs for oil marketing companies.
Retail fuel prices were increased only in May, leaving OMCs to absorb a major portion of the higher crude costs and putting pressure on profitability.
The broader takeaway for markets is that India Inc's earnings recovery looks considerably healthier once the volatile crude and BFSI sectors are stripped out.
With sales growth accelerating and profits growing even faster, the June quarter points to resilient underlying corporate momentum despite a challenging global backdrop.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.