India Inc holds steady in Q3, but margin pressure mounts: Crisil Intelligence
Four sectors – automobiles, cement, pharmaceuticals and aluminium – which account for more than 20% of the revenue of the companies analysed, are expected to have lifted the overall numbers.
Four sectors—information technology (IT) services, steel, power and construction—which together account for more than a third of the revenue, are expected to have been drags on growth. (Image: Freepik)
Corporate revenue for India Inc is expected to grow between 6% and 7% year-on-year in the December quarter, matching the pace of the previous quarter. This steady performance comes as the broader economy is projected to see India GDP growth seen at 6.8% in FY27, despite global headwinds. The outlook comes from a Crisil Intelligence analysis of roughly 600 companies that represent more than half of the market capitalisation on the National Stock Exchange.
Four key sectors, namely automobiles, cement, pharmaceuticals, and aluminium, account for more than 20% of the aggregate revenue of the companies tracked. Together, they lifted the overall performance.
The automobile sector is projected to see revenue rise by 13%. Strong demand across passenger vehicles, two-wheelers, commercial vehicles, and tractors drove this growth. Passenger vehicle revenue likely jumped 26%, supported by a 22% increase in domestic volume. Price rationalisation after a reduction in the goods and services tax, along with deferred replacement demand from the second quarter, propped up volumes.
The cement sector likely climbed 9%, riding on an expected 8% rise in volume. Post-monsoon recovery and demand pick-up after the festive season supported this growth. Meanwhile, the pharmaceutical sector posted 9% revenue growth, fueled by healthy exports and stable domestic demand. The aluminium sector is expected to grow 8%, primarily due to a 12% price hike, even though demand was impacted by lower export volume following higher US tariffs.
On the other hand, four sectors, namely information technology services, steel, power, and construction, together account for more than a third of the revenue and acted as a drag on growth. Pushan Sharma, Director at Crisil Intelligence, pointed out that the IT services sector is expected to grow just 3%, as manufacturing-related projects dominated amid lingering global uncertainties. The power sector is seen up around 3% as renewable energy capacity additions lowered demand for coal-based electricity. Steel sector revenue growth was likely limited to 2% amid weak selling prices and slack domestic demand, exacerbated by the absence of a safeguard duty in November and December. The construction sector likely slipped 2% due to slowing central allocations to infrastructure, a trend that highlights the ongoing challenges in India to drive 14% of global construction growth despite long-term potential.
Despite steady revenue growth, margin pressure mounted across key segments. The earnings before interest, tax, depreciation, and amortisation (EBITDA) of the analysed companies is expected to have increased by around 3% year-on-year. However, EBITDA margins are likely to have contracted by 50 to 100 basis points, pulled down by automobiles, steel, construction, and IT. This margin squeeze reflects how companies are navigating input cost pressures and shifting investment patterns, as explored in Where India Inc Put Its Money in FY26.
Elizabeth Master, Associate Director at Crisil Intelligence, explained that four of the top ten sectors are likely to post margin declines. The automobile sector may have seen a 50 to 100 basis points on-year slippage, reflecting the lagged impact of higher aluminium prices, which rose 11% year-on-year in the previous quarter. For the steel sector, margins are seen down 40 to 60 basis points due to higher costs of inputs such as iron ore and coking coal. The construction sector may have logged a 20 to 40 basis points decrease because of lower revenue and higher operational expenses. The IT sector also likely logged a slightly lower margin because of higher employee costs resulting from changes in labour laws, as companies provided for higher statutory employee benefits, mainly gratuity and leave encashment.
The other six sectors likely clocked margin expansion. Aluminium may have seen a significant 130 to 150 basis points improvement due to a substantial decline in alumina costs, which more than halved in the third quarter of fiscal 2026. The telecom services segment is expected to have dialled up 100 to 120 basis points gains, driven by growth in home broadband, higher average revenue per user from quality customers, capital expenditure efficiency, and ongoing cost discipline. The cement sector likely saw 80 to 100 basis points expansion, supported by stable costs. The resilience of major corporate players underscores that India’s structural growth story remains intact despite these short-term operational headwinds.
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