India Inc reported a solid top-line performance in Q2 FY27, backed by robust volume growth across infrastructure, retail, and manufacturing.
India Inc has had a good earnings season so far, with strong top-line growth only slightly dulled by margin pressure. Companies pushed through healthy volumes in the quarter, but not all could offset rising input costs with price increases, and operating margins have suffered as a result. Management commentary, however, points to robust demand. JSW Steel, which posted a 58% year-on-year jump in operating profit for the second quarter of FY27, plans to double capacity by FY32.
UltraTech, coming off a good quarter, flagged an improving pricing environment. At Larsen & Toubro, order inflows are running ahead of guidance, and the order book has grown an encouraging 28% y-o-y to `8.6 lakh crore. Bankers, meanwhile, expect credit growth to hold strong at 14–15%. Analysts at Jefferies say that, so far, the FY27 earnings upgrade ratio is sustaining at 50% plus but point out this is a shade lower than in the June quarter.
Makers of consumer goods and retailers have been impacted by the shift in the festive season to October-November this year. The outlook, however, is optimistic with management commentary suggesting the peak festive period will be rewarding in terms of sales. At the same time, there is some concern raw material pressures will not ebb soon. Godrej Consumer Products, for instance, confirmed input cost inflation continues to be higher in Q3; the company could soon take price hikes in some categories.
TVS Motor too expects commodity pressures to persist, albeit at a lower intensity than in the April-September period. At Asian Paints, the management expects volumes to grow at 8-9% in the second half of FY27, better than in Q2. The company also plans to take further price hikes of around 3%, which would help shore up margins; Ebitda (earnings before interest tax, depreciation and amortisation) margins contracted 200 basis points in the September quarter; the approach now is to balance growth and margins.
At Hindustan Unilever, which reported its best revenue growth in 14 quarters, gross margins contracted sharply by 400 basis points as the company’s price hikes have been gradual in an inflationary environment. However, the FMCG player’s Ebitda margins dipped by a much smaller 130 bps y-o-y as HUL reined in expenses on A&P and extracted cost efficiencies. 08% y-o-y, operating margins were virtually flat at 16.67% as total expenses rose 24.81%.
Net profits for the sample were up a strong 28.66%. Reliance Industries posted a good set of numbers as consolidated net profit was up 40.6% y-o-y in the quarter, led by a strong performance from its oil-to-chemicals (O2C) business. Retailers have reported decent results. Avenue Supermarts’ revenue growth accelerated to 18% y-o-y in Q2, compared with 15% in Q1 as like-for-like growth recovered to 9.5% y-o-y from 5.5% in Q1FY27.
Again, Trent’s revenue from operations rose 22% y-o-y, pushing up the operating profit by 37%. Analysts at the Jefferies have noted that banks, two-wheelers, power utilities and consumer goods companies have delivered good results with IT services and consumer staples turning in mixed numbers. A 44% y-o-y jump in revenues, boosted by a 27% rise in volumes, helped TVS Motor gain operating leverage and overcome commodity cost headwinds.
The 2-wheeler manufacturer’s margins were also supported favourable currency benefits and tight cost-control measures. On the other hand, the performance of four-wheelers has been weak. At Maruti Suzuki, revenues grew 26% y-o-y but they were helped by a low base and were driven entirely by volumes. Realisations at the country’s biggest carmaker were flat y-o-y. Ebitda margins contracted by 310 points leaving the operating profit lower by 6%.
Hyundai Motors’ realisations were up by about 3.3% y-o-y while volumes were up 15% supporting sales growth of 18.5% y-o-y. Gross margins declined by 270bp y-o-y weighed down by elevated commodity prices. Despite help from a depreciating currency, it has been an ordinary quarter for IT services companies with growth on both revenues and margins remaining muted. The lower FY27 revenue guidance from Infosys — lowered to 1-2% in constant currency terms from 1.5-3% earlier — is disappointing and makes it evident the pricing environment remains difficult.
Companies continue to deal with AI deflation. TCS said AI revenues grew 19.2% sequentially crossing 10% of total revenue while non-AI revenue declined sequentially. Analysts believe that the revenue impact from AI deflation will continue to outweigh incremental revenue opportunities from AI, in the near term.
