India Inc. is projected to sustain a year-on-year revenue growth of 8–10% in the fourth quarter of the fiscal year 2026. Operating profit margins are anticipated to increase by 50–75 basis points, supported by strong rural demand and a gradual recovery in urban consumption. The credit metrics are expected to stay robust, with an interest coverage ratio likely around 5.3–5.5 times, similar to the previous quarter.
The report by ratings agency ICRA highlighted that domestic rural demand remains resilient. Policy measures like GST rate rationalization, income tax relief announced in the Union Budget 2025, and reductions in policy rates by the Reserve Bank of India are expected to boost urban consumption. The recent reduction in US tariffs and free trade agreements are seen as positive developments for export-oriented sectors such as textiles, diamonds, leather, and auto components.
Despite these positive indicators, the report cautioned about ongoing uncertainties in the trade environment. Factors such as fluctuating tariffs, geopolitical tensions, and supply chain adjustments continue to pose challenges. Sectors like automobiles have benefited from GST 2.0 reforms, witnessing a significant year-on-year growth in sales volumes in Q3 FY26.
In the hospitality industry, while overall demand remained strong, mid-scale hotel operators faced margin pressure in Q3 FY26 due to the withdrawal of certain input tax credit benefits. This limited their ability to offset tax costs on operating expenses. The report also noted early signs of a revival in private capital expenditure, particularly in policy-supported segments such as defence, electronics manufacturing, PLI-backed sectors, renewables, and data centers.
