Corporate revenues jump most in six quarters on GST push

Mumbai: Corporate revenues in the three months to December surged the most in six quarters, undergirding double-digit profit growth for India Inc for six months in a row, as the biggest goods and services tax (GST) reforms since the 2017 nationwide adoption of a uniform levy drove sales higher in sectors such as automotive, energy, metals and financials.

Buoyancy in these large-weighting sectors helped offset the one-time financial impact of India’s revamped labour codes on the $280-billion technology outsourcing and communications businesses that collectively have significant weights on the Nifty 50 – just after the financials.

Momentum Seen in FY27
Analysts expect India’s corporate earnings to maintain their world-leading, double-digit growth rates in FY27 too, as bespoke trade deals on either side of the Atlantic seaboard buoy New Delhi’s export prospects in two of the world’s largest consuming blocs. In the third quarter, for a common sample of 3,723 companies considered by ETIG, revenue and net profit rose 9.8% and 13.5%, respectively. The growth rates were 8.1% for revenue and 14.5% for net profit in the second quarter ended September 2025.

“Earnings growth for the companies under coverage at 16% year-on-year was in line with our estimates, largely driven by metals, oil and gas, and banking and finance sectors,” said Gautam Duggad, institutional research head, Motilal Oswal Financial Services citing that Nifty 50 companies delivered 7% profit growth.
ETIG’s aggregate sample excludes the numbers of Tata Motors PV because the company had significant exceptional gains of Rs 82,616 crore in the September quarter due to the demerger of the commercial vehicles business.
This resulted in net profit of Rs 76,248 crore, forming 15% of the sample’s profit for the second quarter, thereby skewing the base. Including Tata Motors PV numbers to the total sample, net profit growth in the December 2025 quarter drops to 11.1% and that in the previous quarter jumps to 33.7%. Revenue growth, too, falls to 8.5% and 7.7%, in that order. According to Feroze Azeez, joint CEO, Anand Rathi Wealth, broader market profit growth was better than that of the benchmark Nifty 50 companies.
Size Doesn’t Matter
“This divergence suggests that earnings traction is shifting toward mid- and small-cap companies, supported by sectoral rotation, operating leverage benefits, and relatively lower base effects,” Azeez said. The sample’s operating margin contracted 60 basis points year-on-year to 17.8%. It remained flat at 15.4% after excluding banks and finance companies, reflecting that the lending sector continued to show pressure on net interest margins (NIM), or their core profitability.

One basis point is a hundredth of a percentage point. Azeez believes that India Inc’s margin outlook appears selectively constructive, with resilience in capital-intensive and financial sectors.

“Globally linked and consumption-driven segments may experience gradual normalisation rather than sharp expansion,” he added.

Sectorally, the performance was rather mixed. “The energy sector benefited from relatively low and stable crude oil prices, while better loan growth and stable asset quality underpinned the strength in financials,” said Antu Eapen Thomas, research analyst, Geojit Investments.

On the downside, communication services and consumer discretionary were the major laggards amid one-time provisions related to the new labour codes, Thomas said.

Better & Brighter
The outlook appears to be brighter.

Duggad believes that earnings momentum will strengthen further, supported by a low base in FY25 and improving business fundamentals. “The resolution of the India-US trade deal removes a significant overhang and positions India among the most competitive exporters relative to key emerging market peers,” he said.

According to Geojit’s Thomas, the GST rationalisation implemented in late 2025 has supported disposable income, providing an additional boost to consumption. “Nifty 50 earnings growth is projected at 5-6% for FY26, accelerating to 12-15% in FY27,” he said. Anand Rathi’s Azeez expects a meaningful recovery in FY27 following consolidation in FY26. “In the coming quarters, opportunities are expected to emerge in sectors such as capital expenditure and infrastructure, supported by sustained government spending and a revival in private capital expenditure,” he said.