Key Details
RBI’s review of 3,266 listed private non-financial companies shows strong revenue growth across manufacturing and services, rising input-cost pressures in industry, and improving debt-servicing capacity across the corporate sector.
Indicator | Q4:2025–26 | Context |
|---|---|---|
Aggregate Sales Growth | 13.9% | Up from 10.1% in Q3 |
Manufacturing Sales Growth | 14.5% | Led by automobiles, electrical machinery and non-ferrous metals |
IT Services Sales Growth | 9.9% | Up from 8.8% in Q3 |
Non-IT Services Sales Growth | 20.3% | Driven by wholesale and retail trade |
Raw Material Expenditure Growth | 18.3% | Outpaced manufacturing sales growth |
Raw Material-to-Sales Ratio | 58.5% | Up from 57.5% a year earlier |
Manufacturing Operating Profit Growth | 9.4% | Down from 11.8% in Q3 |
Manufacturing Interest Coverage Ratio (ICR) | 9.5 | Improved from 9.0 in Q3 |
Summary
Corporate Revenue Growth Accelerated Across the Economy
The Reserve Bank of India’s quarterly review of 3,266 listed private non-financial companies indicates that corporate activity remained robust during the final quarter of FY2025–26. Aggregate sales grew by 13.9% year-on-year, accelerating from 10.1% in the previous quarter and reflecting continued strength in domestic demand conditions.
Growth was broad-based across sectors. Manufacturing companies recorded 14.5% sales growth, supported by automobiles, electrical machinery, and non-ferrous metals. The services sector also remained resilient, with IT services expanding by 9.9% and non-IT services recording a sharp 20.3% increase, led primarily by wholesale and retail trade activities.
Rising Input Costs Weighed on Manufacturing Margins
While revenues strengthened, manufacturing firms faced growing cost pressures. Raw material expenditure increased by 18.3% year-on-year, outpacing sales growth and pushing the raw material-to-sales ratio up to 58.5%from 57.5% a year earlier.
As a result, manufacturing profitability expanded at a slower pace. Operating profit growth in the sector moderated to 9.4%, compared with 11.8% in the previous quarter, indicating that higher revenues were partly offset by rising input costs.
The data highlights a familiar corporate challenge: strong demand is supporting sales growth, but elevated raw-material costs are compressing operating margins.
Corporate Balance Sheets Remained Healthy
Despite margin pressures, the broader financial health of listed firms remained stable. The Interest Coverage Ratio (ICR) of manufacturing companies improved to 9.5 in Q4 from 9.0 in the previous quarter.
The improvement suggests that firms continue to generate sufficient operating earnings to comfortably meet their interest obligations. Strong debt-servicing capacity reduces immediate concerns regarding corporate leverage and supports overall financial stability within the banking system.
Demand Strength Continues to Support Corporate Resilience
Taken together, the RBI data points to an economy where sales growth is strengthening, profitability is facing some cost pressures, and balance-sheet indicators remain healthy. While rising input costs warrant monitoring, the combination of strong revenues and improving debt-servicing metrics suggests that the listed corporate sector remains resilient.
What is the Interest Coverage Ratio (ICR)?
The Interest Coverage Ratio (ICR) measures a company’s ability to meet its interest-payment obligations from operating earnings.
It is calculated by dividing earnings before interest and taxes (EBIT) by interest expenses. A higher ratio indicates stronger debt-servicing capacity, while a lower ratio may signal financial stress.
For policymakers and financial regulators, the ICR serves as an important indicator of corporate-sector health and potential risks to the banking system.
Policy Relevance
Continued Strength in Domestic Demand: Double-digit sales growth across manufacturing and services suggests that domestic consumption and business activity remained supportive during the quarter.
Emerging Cost Pressures in Industry: The rise in raw material costs and the increase in the raw material-to-sales ratio indicate that input-cost inflation continues to affect manufacturing profitability.
Financial Stability Monitoring: The improvement in the manufacturing sector’s Interest Coverage Ratio suggests that corporate borrowers remain well-positioned to service debt despite higher operating costs.
Insight into Sectoral Growth Patterns: Strong growth in manufacturing, retail, and wholesale trade offers important signals about evolving economic activity and sector-specific momentum.
Industrial and Monetary Policy: The interaction between revenue growth, profitability, and cost pressures provides policymakers with valuable evidence on corporate conditions, investment sentiment, and inflation transmission across the economy.
Follow the Full Release Here: Reserve Bank of India: Performance of Private Corporate Business Sector during Q4:2025–26.