Key Details
The RBI’s quarterly assessment covers the abridged financial results of 3,247 listed non-government, non-financial companies.
Aggregate sales: Growth accelerated from 13.9% in Q4 FY26 to 19.4% year-on-year in Q1 FY27.
Manufacturing: Sales growth increased from 14.5% to 21.4%, led mainly by automobiles, petroleum and electrical machinery.
Information technology: Sales grew 14.8%, against 9.9% in the previous quarter.
Non-IT services: Sales growth remained strong at 19.7%, marginally below 20.3% in Q4.
Profitability: Operating-profit margins improved sequentially across all three major sectors.
Manufacturing Led the Acceleration
Sales growth was strongest among the 1,827 manufacturing companies in the RBI sample. Their 21.4% expansion accounted for much of the improvement in the aggregate corporate numbers.
IT companies also moved back into double-digit growth, while non-IT services maintained momentum. Within the latter, wholesale and retail trade was the principal driver.
The figures indicate that corporate demand remained broad-based across goods and services, although the release does not separate how much of the increase came from higher volumes and how much from higher prices.
Input Costs Rose Faster Than Sales
Manufacturing companies’ raw-material expenses increased 27.5% year-on-year, exceeding their sales growth. The RBI associates this increase with global supply-chain disruptions.
Even so, the ratio of raw-material expenses to sales declined marginally from 58.5% to 58.1% compared with the previous quarter. This suggests that companies were able to absorb or offset the higher input bill through a combination of pricing, product mix and operating scale.
Staff costs also increased:
Manufacturing: 12.4%
IT: 7.6%
Non-IT services: 11.2%
For manufacturing and non-IT services, staff costs rose as a share of sales, while the ratio declined sequentially for IT companies.
Operating Profits Outpaced the Previous Quarter
Manufacturing operating-profit growth accelerated from 9.4% to 21.3% year-on-year. IT operating profits grew 19.9%, while non-IT service profits increased 12.7%.
The combination of faster sales, higher profits and improved sequential margins points to continued corporate pricing and cost-management capacity during the quarter. Whether this can persist will depend on the duration of supply disruptions and the ability of firms to pass higher costs through without weakening demand.
Debt-Servicing Capacity Improved
The manufacturing sector’s interest coverage ratio increased to 10.2, while the ratio for non-IT services rose to 2.6. IT companies continued to record a comparatively elevated ratio.
An interest coverage ratio compares earnings before interest and tax with interest expenses. A value above one means operating earnings are sufficient to cover interest payments. The improvement therefore indicates stronger aggregate debt-servicing capacity, although non-IT services retained a considerably smaller cushion than manufacturing.
Coverage Matters
The findings apply to listed non-government, non-financial companies that had declared quarterly results. They should not be treated as representative of unlisted firms, MSMEs, financial companies or the entire private corporate sector.
The composition of the sample can also vary between quarters depending on when companies publish results, although the RBI states that this is not expected to materially change the aggregate picture.
Policy Relevance
Growth appears resilient: Faster corporate sales and profit growth provide a positive signal for production, investment and tax revenues.
Cost pressures remain important: The 27.5% rise in raw-material expenses suggests that global disruptions are already feeding into company accounts, even though margins improved during Q1.
Smaller firms may face a different position: Large listed companies generally have greater bargaining power and access to finance. Policymakers should avoid assuming that their margin resilience extends automatically to smaller suppliers and unlisted businesses.
Investment is the next indicator: The results show stronger current operations, but sustained economic gains will depend on whether improved earnings translate into capital expenditure, capacity creation and employment.
Follow the Underlying Data Here: RBI Database on the Corporate Sector