ICRA sees muted 5-6% revenue growth for India Inc in Q2

New Delhi: Rating agency ICRA expects India Inc to report muted revenue growth of 5-6 per cent in the second quarter of the fiscal as against 5.5 per cent in the preceding three months.

Coupled with softening of input costs such as crude oil and coal, this will result in a steady Operating Profit Margin (OPM) in the range of 18-18.2 per cent on a year-on-year (YoY) basis, it said in a release.

As a result, the credit metrics of India Inc. in Q2 FY2026 are likely to remain largely stable, with the interest coverage ratio at 4.9-5.1 times, against 4.9 times in Q1 FY2026, it said.

"The ongoing geopolitical tensions and steep US tariffs continue to impact demand sentiments, especially for export-oriented sectors such as agro-chemicals, textiles, auto and auto components, seafoods, cut and polished diamonds, and IT services," said Kinjal Shah, Senior Vice President and Co-Group Head - Corporate Ratings at ICRA Limited. She further said that while domestic rural demand remains resilient, urban demand is yet to recover meaningfully.

Despite tailwinds such as income tax relief and easing food inflation, a recovery in sentiments would be key to a pickup in urban demand. In that context, the expected GST rate cuts could provide some stimulus to demand, Shah added. ICRA reported modest Q1 FY26 revenue growth, driven by consumption and infrastructure, with premiumisation and expansion by organised players

offsetting weak demand.