MODERATE GROWTH, STRONG PROFITS

INDIA INC IS NOW REPORTING STRONGER PROFITABILITY AND IMPROVING BALANCE SHEETS. BUT REVENUE GROWTH HAS MODERATED

- BY PRINCE TYAGI • ILLUSTRATION BY NILANJAN DAS/AI

FIRST, THE GOOD news.

In a heartening sign of resilience, India’s top companies posted robust growth in the past financial year after a two-year hiatus, benefiting from benevolent commodity cycles and cost management that helped them navigate otherwise tough market conditions at home and abroad.

Leavening that bit of cheer is a bit of bad news: uncertainty in West Asia despite the end of the US-Iran war. Even the status of Strait of Hormuz, the chokepoint for 60% of world oil trade, is unclear despite the truce.

Acknowledging the multiple clouds hanging over the economy, the Reserve Bank of India on June 5 cut its GDP growth forecast from 6.9% to 6.6% and raised its consumer price index (CPI)-based inflation forecast from 4.8% to 5.1%.

No wonder analysts are cautious. Shreyash Devalkar, Axis Mutual Fund’s Head of Equity, for instance, says future corporate performance will hinge on evolving macroeconomic conditions. “Since the war started, there are changes in macroeconomic parameters and input costs while none of these got reflected in the last results season,” Devalkar says.

The changes he is referring to are currency movements—the rupee has depreciated significantly against the dollar since the US and Israel declared war against Iran at the end of February; India’s rising current account deficit (CAD) and impact on interest rates. Raw material, fuel prices and even packaging costs have risen.

PROFITS PIP REVENUE

To get back to the good news, in FY26, companies posted stronger profitability and improved balance sheets. Data from ACE Equity database shows that Nifty 500 companies posted a combined net profit of ₹18.2 lakh crore in FY26, a 14% increase over ₹15.9 lakh crore in FY25.

However, the pace of revenue growth was slow. The combined revenue of Nifty 500 companies increased close to 6% year-on-year (YoY) to ₹168 lakh crore in FY26.