India Inc likely recorded on-year revenue growth of 8.5–9.0 per cent in the March quarter of fiscal 2026, aided by sustained volume momentum in automobiles and white goods after the September 2025 rationalisation of Goods and Services Tax (GST) rates, even as profitability came under pressure from disruptions linked to the West Asia conflict, according to a report by Crisil Intelligence.
The analysis, based on more than 400 companies accounting for nearly half of India’s listed market capitalisation, signals a turning point in the quality of growth for corporate India. After eight consecutive quarters driven largely by volumes, revenue momentum is increasingly being supported by price hikes, except in segments that benefited directly from GST rationalisation, Crisil Intelligence said.
However, the report warned that the March quarter may mark the start of a more difficult phase for corporate margins as geopolitical headwinds intensify and feed through supply chains.
“In the first quarter of fiscal 2027, margin pressure is expected to broaden and deepen, driven by inventory roll over and replacement cost reset as companies navigate an increasingly tight trade-off between passing on higher input and logistics costs through selective price hikes and preserving demand, volumes and market share, particularly in price-sensitive categories such as travel and consumer staples,” Miren Lodha, Senior Director, Crisil Intelligence.
Consequently, the aggregate margin may decline 75–100 bps on-year to a 12-quarter low, with around two-thirds of sectors reporting contraction. The impact is likely to be most severe for sectors directly linked to energy and feedstock, where margins may decline 200–300 bps on-year.
From Immediate Supply Shock To Structural Cost Pressures
The West Asia conflict has begun shifting from an immediate supply shock to more structural cost pressures. While transit through the Strait of Hormuz remains selectively open more than 50 days into the conflict, the disruption is no longer seen as an event risk but as an ongoing constraint affecting delivered costs, transit times, insurance premiums, tanker availability and working capital cycles.
India’s exposure to the region amplifies the impact. The country imports around 89 per cent of its crude oil needs, with 46 per cent routed through Hormuz. About half of its liquefied natural gas imports and up to 95 per cent of liquefied petroleum gas imports also pass through the same corridor, leaving a limited buffer against prolonged disruption, the report noted.
Beyond energy, West Asia accounts for roughly 13 per cent of India’s goods exports to Gulf Cooperation Council countries and 38 per cent of remittance inflows, creating additional vulnerability through trade, freight and income channels. Gems and jewellery, processed food, rice and meat exports are particularly exposed.
These pressures were already visible in the March quarter. Crisil Intelligence estimated that margins for the analysed companies contracted by 25–50 basis points on-year, with sharper declines of around 100 bps for sectors heavily dependent on crude oil, gas or derivatives as fuel or feedstock, including airlines, chemicals, fertilisers, petrochemicals, pharmaceuticals, shipping and tyres.
Export-oriented sectors are also feeling the strain. Textiles, pharmaceuticals and engineering goods exports have been affected by shipping disruptions and a two- to three-fold increase in freight costs on the India–West Asia route, the report said. In contrast, services exports such as information technology and IT-enabled services may benefit from rupee depreciation despite slower decision-making on large-ticket engagements.
Looking ahead, Crisil Intelligence expects revenue growth to moderate to 8–8.5 per cent on-year in the June quarter of fiscal 2027 as price-led growth begins to temper demand amid higher input and logistics costs.
The report shows that while GST rationalisation provided a near-term boost to volumes in select consumer segments, the broader corporate landscape is entering a phase where geopolitical risks, energy dependence and trade linkages could weigh more heavily on profitability than on topline growth.
Source from: https://www.businessworld.in/article/gst-boost-lifts-india-inc-revenue-margins-face-west-asia-squeeze-603883
