India Inc Q3 Sales Jump 11.4%, Profit Growth Moderates Amid Rising Costs

Though net sales grew at a healthy pace, the growth in operating profit moderated to 12 per cent in Q3 FY26 from 15.7 per cent in the previous quarter, weighed by rising expenditure of the companies.

The overall expenditure rose by 11.2 per cent in Q3, up from 8.7 per cent in the previous quarter, the report from CareEdge Ratings said.

Festive‑season consumption, GST rate rationalisation, previous income tax cuts and Reserve Bank of India (RBI) rate cuts boded well for the overall business activity in the quarter, it said.

Net sales acceleration was broad‑based across sectors such as automobiles, information technology, non‑ferrous metals, pharmaceuticals, capital goods and fast‑moving consumer goods.

The surge in expenditure comes amid rising employee costs, service, and raw material costs. Additionally, increased outlay towards provisioning for the New Labour Codes under 'Exceptional Items' has also weighed on the net profitability, the report noted.

The ratings agency noted that employee costs climbed 12.1 per cent and services and raw material costs rose 11.4 per cent.

Operating profit margin eased to 19 per cent from 19.5 per cent in the prior quarter, even as interest coverage improved to 8.4 from 8.1, and above the eight‑quarter average of 7.9.

The analysis found sectors such as non‑ferrous metals, automobiles & ancillaries, retailing and capital goods posted above 16 per cent growth in sales and over 20 per cent profit growth.

The domestic fundamentals remain positive, with the consumption scenario showing signs of improvement, buoyed by several policy measures implemented over the last year, it said.

On the investment front, the Centre has maintained its emphasis on capex-led growth, the report said, adding that signs of revival in private investments also remain positive.

- IANS