Indian Corporate margins hit 12-quarter low amid cost pressures

Operating margins for Indian companies are projected to reach a 12-quarter low, driven by supply chain issues and rising energy costs. According to a report by Crisil Intelligence, Indian corporate revenue grew between 8.5 and 9 percent year on year in the fourth quarter of fiscal 2026. This growth was mainly supported by strong volume momentum in the automobile and white goods sectors, following the rationalization of GST rates in September 2025.

Key Highlights

• Operating margins for Indian companies projected to reach a 12-quarter low
• Corporate revenue grew 8.5 to 9 percent year on year in Q4 fiscal 2026
• Supply chain disruptions and energy costs drive margin contraction
• Sectors like airlines and chemicals saw margins fall over 200 basis points
• Construction-linked sectors likely experienced margin expansion

Revenue Growth and Margin Trends

Despite the revenue increase, operating margins for a sample of over 400 companies contracted by 25 to 50 basis points during the quarter. Crisil Intelligence expects aggregate revenue growth to slow to between 8 and 8.5 percent in the first quarter of fiscal 2027. Margins are forecast to decline further by 75 to 100 basis points, reaching the lowest level in three years during this period.

The report attributes the margin pressure to ongoing supply chain disruptions, cost inflation, and price hikes linked to the conflict in West Asia. These factors have created significant risks for India's energy and trade balances.

Sector Impact and Trade Exposure

India imports about 89 percent of its crude oil, with 46 percent transported through the Strait of Hormuz. The country also imports 50 percent of its liquefied natural gas, with 56 percent passing through the same strait. West Asia accounts for 13 percent of India's goods exports and 38 percent of its remittance inflows.

Sectors directly exposed to supply disruptions, such as airlines, chemicals, petrochemicals, and pharmaceuticals, faced notable profitability challenges in the fourth quarter. Margins in these sectors declined by more than 200 basis points year on year. Exports of textiles and engineering goods were also affected, as freight costs on the India to West Asia route increased by two to three times.

In contrast, construction-linked sectors like steel, cement, and aluminum likely saw margin expansion during the same period. These sectors benefited from continued demand and were less impacted by the supply chain and energy cost pressures affecting other industries.

Also Read: SIAM Reviews Revised CAFE Norms Amid Industry-Government Deliberations on Emissions Targets

CarBike 360 Says

Indian companies may still benefit from steady demand in select sectors, but the latest results show that rising costs are once again testing profitability. Unless supply chains stabilize and energy inputs ease, margin recovery could remain uneven in the near term. For now, the 12-quarter low serves as a clear reminder that cost discipline will matter as much as growth.