India Inc’s Q1 FY26: A Tale of Resilience and Reckoning

Q1FY26 has revealed a corporate India that's adapting smartly to shifting global currents while drawing strength from domestic policy support. With RBI’s timely rate cuts cushioning demand, sectors like banking and insurance have surged ahead, even as IT and consumer segments navigate headwinds. Early results from 200+ companies suggest a story of selective strength and strategic resilience. The rest of the earnings season could either cement this momentum—or test it 

As June quarter results for FY26 roll in, Indian companies are presenting a dynamic picture of resilience and adaptation amid global economic and geopolitical headwinds, supported by domestic policy tailwinds. The Reserve Bank of India’s strategic rate cuts in early 2025 have fuelled optimism, with sectors like banking, insurance, and metals outperforming, while IT and consumer goods faced challenges. 

Indian companies reported a robust 10.41 per cent year-on-year revenue growth and an even stronger 14.13 per cent surge in net profits, demonstrating their ability to thrive despite a projected global GDP slowdown to 2.8 per cent. Banking and insurance led the charge, buoyed by RBI’s timely moves and strong domestic demand, with 124 companies posting positive results compared to 75 facing setbacks. However, a 4.16 per cent dip in operating profit margins revealed underlying pressures, particularly in IT and consumer goods due to weak global demand. 

With over 3,700 companies yet to report, the stage is set for a potential blockbuster finale—will India Inc. sustain its momentum, or will global challenges dampen the outlook? The following graph shows the performance at a glance of almost 200 companies posting their June ending result as of July 20, 2025. 

Revenue Growth: A Steady Climb
India Inc. reported a robust year-on-year (YoY) revenue growth of 10.41 per cent, signalling strong top-line performance across the companies that have announced results. This growth reflects resilience in domestic demand as most of the contributions were from domestic-facing companies as export-oriented sectors did not perform better till now. 

Sectors like banking (e.g., Bank of Maharashtra’s 17.6 per cent net interest income growth) and insurance (e.g., ICICI Lombard’s 16.1 per cent premium income growth) likely drove this figure, supported by RBI’s rate cuts in February and April 2025, which lowered borrowing costs and spurred economic activity. However, sectors like IT (-3.7 per cent YoY revenue decline) and certain consumer goods segments (-10.8 per cent YoY for some brands) may have tempered the overall growth rate. 

The double-digit revenue growth underscores India Inc.’s ability to navigate global uncertainties, such as a projected global GDP slowdown to 2.8 per cent in 2025, while capitalising on domestic policy support and selective global demand. 

Net Profit Growth: Outpacing Revenue
Net profit growth of 14.125 per cent YoY outpaced revenue growth, indicating improved profitability and operational efficiency for many companies. This strong bottom-line performance suggests effective cost management and favourable market conditions in key sectors. 

Companies like Reliance Industries (36 per cent YoY PAT growth aided by one-time profit due to the sale of a stake in Asian Paints), Central Bank of India (30 per cent YoY PAT growth), and ICICI Lombard (29 per cent YoY PAT growth) likely contributed significantly to this metric. However, challenges in IT remain, where profits were pressured by global demand slowdowns and deferred orders, which may have limited even higher growth. 

Operational Profit and EBIT Growth: Solid but Slightly Lagging
Operating profit grew by 9.035 per cent YoY, slightly trailing revenue growth, while EBIT (earnings before interest and taxes) grew at a healthier 12.46 per cent. The solid EBIT growth suggests companies maintained strong core earnings, though operating profit growth was more modest, possibly due to rising input costs or sector-specific pressures. 

Sectors like metals (e.g., JSW Steel, Hindustan Zinc) and hospitality (e.g., Oriental Hotels with 15 per cent YoY revenue growth) likely supported operating profit growth through stable commodity prices and domestic demand. 

However, IT companies faced margin pressures due to deferred orders, and NBFCs like HDB Financial saw a 62 per cent surge in credit costs, which may have weighed on operating margins. 

Company Performance: More Winners Than Losers
Of the companies that announced results, 124 reported positive outcomes in terms of profit growth, while 75 posted negative results, yielding a positive-to-negative ratio of approximately 1.65:1. This indicates a broadly favourable performance, though challenges persist for a significant minority. 

Strong performers included banks (e.g., Central Bank of India, Bank of Maharashtra), insurance firms (e.g., ICICI Lombard), and metals companies, driven by domestic demand and policy support. Negative results were concentrated in IT (e.g., revenue declines in North America and India markets). 

Out of 124 companies that came out with the results so far, banks and IT form the majority of numbers. Also, since they are index heavyweights, we will analyse them in the following section. 

IT Sector: Navigating Headwinds While Betting on AI-Led Growth
Despite weak discretionary IT spending globally, Large-Cap Indian IT firms benefitted from AI-focused transformation deals and ongoing cost-optimisation efforts. While Q1FY26 revenue growth remained subdued, profitability held firm due to strict cost discipline, favourable currency movements, and early monetisation of GenAI contracts. However, in July so far, the Nifty 50 has slipped 2.2 per cent, with the Nifty IT index underperforming with a 4.4 per cent decline, as weak global cues and profit booking in IT stocks weighed on market sentiment. 

The following chart shows the performance of some of the prominent IT companies 

Operationally, IT companies saw attrition drop to multi-year lows, helping improve workforce stability. However, hiring stayed limited as firms focused on better employee utilisation and keeping costs in check. Currency movements, especially the weakening of the euro and pound, hurt companies with large European exposure, even though the U.S. dollar gains provided some relief. 

Looking ahead, the sector’s performance will depend on how quickly new deals pick up in the second half of FY26. A large part of the current deal pipeline—around 70 per cent—is focused on AI, cloud services, and cybersecurity. But some challenges remain, like currency swings, tougher visa rules, and weak demand from Europe. 

The June-quarter results show that the IT sector is going through a transition. While revenue growth is slow, profits are holding up, and AI-related orders are growing. 

The double-digit revenue growth underscores India Inc.’s ability to navigate global uncertainties, such as a projected global GDP slowdown to 2.8 per cent in 2025, while capitalising on domestic policy support and selective global demand. 

Banking Sector
The Indian banking sector delivered a mixed performance in Q1 FY26 (April–June 2025), demonstrating resilience in profitability despite facing substantial headwinds. The quarter was marked by the sharpest slowdown in credit expansion seen in recent years, as banks grappled with softening loan demand, narrowing interest margins, and regulatory measures impacting unsecured lending. While most major banks reported healthy profit growth, monetary policy easing and margin compression added pressure. Reflecting the cautious tone in the markets, the Nifty 50 index has declined by 2.2 per cent in July so far, while the Nifty Bank index is down 0.9 per cent, indicating investors' interest towards the sector. 

Among individual players, private sector banks led in absolute earnings, while public sector banks (PSBs) outperformed in terms of growth rates. Union Bank emerged as a standout performer with a 22 per cent year-on-year (YoY) increase in net profit, supported by 4 per cent revenue growth, showcasing operational strength. ICICI Bank delivered consistent results with 16 per cent growth in net profit and a 10 per cent revenue rise, backed by stable asset quality. AU Small Finance Bank impressed with strong revenue growth and a 10 per cent positive EPS surprise, reflecting efficient execution. In contrast, HDFC Bank reported 7 per cent revenue growth but a 1 per cent dip in net profit even after one-time adjustments, while Axis Bank saw a 3 per cent decline in net profit despite 4 per cent revenue growth, due to higher provisions. 

The sector continues to operate in a mixed macro environment. While subdued demand weighs on growth, regulatory support in the form of surplus liquidity and upcoming CRR cuts provides a cushion. The outlook remains cautiously optimistic. Continued investment in digital transformation, a growing focus on secured lending, and efforts to diversify product offerings position the sector well to capture future growth as the broader economy gradually recovers in the second half of FY26. 

Conclusion
Q1FY26 has laid a strong foundation for India Inc.’s resilience narrative, with double-digit growth in both revenue and net profit despite margin pressures. While banks and insurance firms thrived on domestic strength and policy support, IT companies demonstrated strategic adaptation through AI-led deals and cost optimisation. With over 3,700 results still pending, the rest of FY26 holds significant promise—and risk. The key question now: can India Inc. convert this early momentum into sustained growth amid global volatility?