Early birds indicate resilient Q2 as corporate India defies global headwinds

markets

Corporate India’s September quarter earnings so far have begun on a promising note, offering early signs of resilience amid global uncertainty and renewed US tariffs. Despite subdued demand, volatile input costs, and currency fluctuations, companies have managed to post marginal growth in both revenue and net profit, reflecting a steady performance in a challenging environment.

A Moneycontrol analysis of 150 companies, excluding energy, banking, insurance, and financial services, showed operating profit rising 11 percent year-on-year, the fastest pace in eight quarters. Net profit increased 8 percent in Q2FY26, easing slightly from 10 percent in Q1FY26 but improving from 6 percent in Q2FY25. Net sales growth accelerated to 11 percent, the strongest in eight quarters, compared with 10 percent in the previous quarter and 6 percent a year earlier.

The earnings growth came despite mounting cost pressures. Total expenses surged 11 percent year-on-year, the sharpest rise in 10 quarters, while depreciation rose 11 percent and interest costs jumped 19 percent, marking the biggest increase in seven quarters. Operating profit margin stood at 21.1 percent, its slowest growth in 12 quarters.

Interestingly, IT majors, despite facing heightened global volatility, posted in line revenue and profit growth. Strong execution, disciplined cost control, and an increasing focus on AI-led transformation enabled large-cap IT firms to deliver steady results amid muted global demand. However, management commentaries indicate a softer H2FY26, weighed down by restructuring and delayed ramp-ups in select verticals.

Muted discretionary tech spending failed to dent performance across the IT sector. Sequential growth was driven by consistent deal momentum in BFSI, manufacturing, and energy segments. Infosys led with robust topline expansion, while TCS maintained steady momentum across key verticals. Improved operational efficiency, better utilisation, and reduced subcontracting costs helped lift EBIT margins.

Analysts said that sustaining profitability amid cost and demand headwinds highlights improved operational discipline across Corporate India. While operating margins have dipped to a 12-quarter low, the moderation appears cyclical rather than structural. With inflation cooling, interest rates softening, and government capital expenditure continuing, margins are expected to stabilise in the coming quarters.

Narinder Wadhwa, Managing Director & CEO of SKI Capital Services, said, “These results reflect the underlying strength of India Inc.—its ability to navigate global turbulence while positioning itself for recovery and growth in the second half of the fiscal year.”

Sector-wise, Nestlé India posted solid domestic volume growth despite margin pressure, while Eternal reported robust expansion in quick-commerce delivery. JSW Steel maintained steady revenues, though Hindustan Zinc was hit by lower metal prices. Renewable energy companies such as Waaree Energy, Vikram Solar, and Waaree Renewable Technologies delivered strong numbers, underscoring the sector’s continued momentum.

According to Sachin Jasuja, Head of Equities and Founding Partner at Centricity WealthTech, “Q2FY26 results point to a stable-to-positive earnings cycle led by infrastructure, banking, solar energy, and domestic consumption, while global IT and export-driven sectors remain under mild pressure. Banking and financial services may see NIM compression due to recent rate cuts, but recovery is expected over the next two quarters.”