Softer costs in Q1 cushion low demand for India Inc.

Early results show revenue rising 5.4% y-o-y; input costs fall most in eight quarters

- Abhinaba Saha

For Indian companies combating a persistent slump in demand, the June quarter offered some relief, when profits rose at the fastest pace in five quarters. The reason: A plunge in raw material costs, even as revenue growth remained muted.

Aggregate revenue of 182 companies that have declared first-quarter results so far showed a marginal improvement to rise 5.4% year-on-year (y-o-y), a Mint analysis showed. Net profits, however, zoomed 23%, as raw material costs fell 14% over the year, the steepest decline in eight quarters.

Raw material costs were also 15% lower than in the March quarter, the sharpest sequential decline since Q1 FY22.

This suggests Indian producers are benefiting from input cost deflation. India's wholesale price inflation index rose 0.4% in April-June, compared with 2.4% in the previous quarter.

Benign crude oil and metal prices due to fears of a global demand slowdown and US-led tariff concerns have lowered production costs for corporations, said Simranjeet Singh Bhatia, senior research analyst at brokerage firm Almondz Global. "Dumping of cheap chemicals from China has also been a key factor."