India Inc continued to report good top and bottomline growth in Q3FY26. Out of the 1,180 companies that reported results till February 5, revenue and PAT growth was at 10.6/13 per cent YoY.
Excluding 203 BFSI companies, revenue and PAT growth was at 11.7/14.6 per cent YoY.
Q3FY26 benefitted from GST rate cuts which was well reflected in the performance of automobiles and FMCG segments.
But as shown in the graph, the rate of profit growth has slowed in the quarter (ex- BFSI), which can be ascribed to two factors. One is the marginal spike in input commodities, and the other is the one-time impact of provisions related to implementation of new labour code.
Commodity costs affecting margins can be gauged from gross margins declining by 18 bps to 52.7 per cent for the 977 companies excluding-BFSI versus some expansion in margin registered in the prior quarter.
Going ahead, commodity costs, led by coal and industrial metals, are expected to be on the high side, which can place a check on margin expansion from here, resulting in stable or lower margins for India Inc.
GST beneficiaries
As mentioned, automobiles, followed by FMCG, have benefitted directly from GST rate cuts. For automobiles, with low inventory and high order book, the sales momentum is expected to carry into 4QFY26 as well. Structurally also, strong demand is expected to sustain in entry to mid-level segments of 4W/2W. Input commodities have been on the rise (steel, aluminium, copper and semiconductor chips), which can offset the operational leverage. Exports continue to do well, and recent trade deals will support the momentum.
In FMCG, growth concerns stemming from urban and rural pockets seem to be overcome by the industry. The GST rate cut reflected well in the quarter with continued growth likely in the next half year. Input commodities are also benign for this segment, but brand building can limit margin growth along with competition that will limit price hikes. Volume growth in construction and infrastructure demand has recovered, post-monsoon, benefitting the cement and steel sectors. Cement prices continue to be on low side in Q3FY26, but price hikes effected in January 2026 should sustain, given the strong demand. Similarly, steel prices continued to be weak in Q3FY26 despite strong growth and demand. The safeguard duties on steel should limit the decline in prices. However, going ahead, there can be possible margin impact as coking coal and energy prices for both the sectors are expected to be higher from here
Other sectors
Banks are now reporting a modest loan growth at 12-15 per cent YoY. The rate cut-driven net interest margin compression may be coming to an end in the quarter and augurs well from here.
The refineries are benefitting from strong gross refining margins in the quarter and are well placed, subject to any spike in crude prices. Power segment earnings were flat as demand was subdued.
The pharma segment revenue grew a decent 11 per cent driven by better domestic business, while margin pressure related to US business impacted earnings. While IT showed some recovery and benefited from currency depreciation, new AI threat to business needs to be watched.
Published on February 8, 2026