India Inc outlook brightens as revenue momentum builds

New Delhi: India Inc will sustain a healthy year‑on‑year revenue growth of 8-10 per cent in Q3/FY2026, compared to 9.2 per cent in Q2, driven by firm rural demand and a revival in urban consumption, a report said on Tuesday.

The report from ratings agency ICRA said the agency projects operating profit margins to improve by 50-100 bps on a year-on-year basis, and expects credit metrics to edge up with interest coverage at 5.3–5.5 times against 5 times in Q2 FY26.

“Domestic rural demand remains resilient and tailwinds like GST rate rationalisation, income tax relief announced during the Union Budget 2025, 100 bps interest rate cut by the Reserve Bank of India between February 2025 and November 2025 (leading to lower borrowing costs) and easing food inflation are expected to boost urban consumption,” said Kinjal Shah, Senior Vice President & Co-Group Head – Corporate Ratings, ICRA Limited.

“The ongoing geopolitical tensions and steep US tariffs continue to impact demand sentiments, especially for export-oriented sectors such as agro-chemicals, textiles, auto and auto components, seafoods, cut and polished diamonds, and IT services,” Shah added.