India Inc. Will Sustain Robust 10% Revenue Growth In Q3 FY2026, Amplified By Firm Rural Demand & Urban Consumption Revival

New Delhi: India Inc. will sustain a healthy year‑on‑year revenue growth of 8–10 per cent in Q3 FY2026, compared to 9.2 per cent in Q2, driven by firm rural demand and a revival in urban consumption, a report said on Tuesday. The report from ratings agency ICRA said the agency projects operating profit margins to improve by 50–100 bps on a year‑on‑year basis, and expects credit metrics to edge up with interest coverage at 5.3–5.5 times against 5 times in Q2 FY26.

“Domestic rural demand remains resilient and tailwinds like GST rate rationalisation, income tax relief announced during the Union Budget 2025, 100 bps interest rate cut by the Reserve Bank of India between February 2025 and November 2025 (leading to lower borrowing costs) and easing food inflation are expected to boost urban consumption," said Kinjal Shah, Senior Vice President & Co-Group Head – Corporate Ratings, ICRA Limited.

"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,” Shah added. ICRA’s analysis of 2,966 companies revealed that Q2 revenue growth was led by retail, hotels, autos, capital goods and cement, though sequential growth was just 2.5 per cent due to seasonal slowdowns in demand in the oil & gas, airlines and power sector and deferment of purchases in the consumer durables and FMCG sector ahead of GST rate cuts.

Corporate India reported a YoY rise in OPM by 140 bps to 16.1 per cent in Q2 FY2026. The margin expansion in sectors like telecom, cement and oil & gas was led by improved demand and better realisations. ICRA forecasted the private capex cycle to remain measured due to the uncertain global environment and tariff-related ambiguity, while electronics, semiconductors, data centres and select automotive segments will continue to scale up.

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