New Delhi [India], September 1 : The revenue growth of Indian companies slipped to a 7-quarter low of 3.4 per cent year-on-year in the first quarter of the current financial year 2025-26, according to a report by ICICI Bank.
The report, which analyzed the quarterly performance of around 3,000 listed companies across manufacturing and services sectors, highlighted that revenue growth has slowed compared with 5.1 per cent in the fourth quarter of FY25 and 6.8 per cent in the same quarter last year.
It stated, "Sample companies' revenue growth fell to 7-quarter low of 3.4 per cent YoY, down from 5.1 per cent in Q4FY25".
The manufacturing sector witnessed a sharp moderation in revenue growth, falling to 2.8 per cent in Q1FY26 from 5.7 per cent in Q1FY25.
This decline was largely driven by commodity sectors such as refineries, oil marketing companies, exploration, and fertilizers, as lower commodity prices weighed on revenues.
The services sector also saw its growth momentum weaken significantly. Revenue growth in the sector halved to 5.8 per cent in Q1FY26 from 11.3 per cent in Q1FY25.
As per report, the slowdown was attributed to deceleration in trade, transport, and real estate, with the early onset of the monsoon and weaker real estate sales impacting growth.
On the expenditure side, the report noted that overall costs also fell, with expenditure growth easing to a 7-quarter low of 2.4 per cent year-on-year.
Capex-related sectors such as steel, cement, and infrastructure firms benefitted from front-loading of government spending.
However, consumption-driven sectors, including FMCG, quick service restaurants, and automobiles, continued to face demand pressures due to weak urban demand.
The IT sector continued to face headwinds, while in real estate, revenue growth was supported by the rising share of the premium housing segment, even as overall volume sales remained lower.
Looking ahead, the report suggested that policy support and the proposed rejig of GST rates could aid domestic demand in the second half of the year. However, the outlook for export-oriented sectors such as textiles remains weak due to US tariffs.
It added that while higher profitability in the refinery sector is expected to support gross value added (GVA) growth, the subdued performance of consumption sectors could partially offset these gains.
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