India Inc delivered a strong performance in the second quarter of fiscal year 2027, with robust revenue and profit growth despite global challenges. Of the 2,864 companies that reported results by November 12, revenue rose 23% year-on-year, and adjusted profit after tax (PAT) increased 29%. Excluding the banking and financial services sector, growth was even higher at 26% and 34%, respectively. Even after removing the impact of refinery gains from global diesel shortages, revenue and PAT growth remained solid at 23% and 25%.
Cost inflation in coal, power, logistics, steel, and copper was sharp, leading to a 257-basis-point decline in gross margins. However, this was an improvement over the previous quarter's 470-basis-point contraction. Strong volume growth helped improve operating leverage, lifting EBITDA margins by 30 basis points. Inflationary pressures were a net positive, but sustained price rises could eventually affect demand, particularly if tensions in West Asia persist.
Key sectors like steel, refineries, and power performed exceptionally well. Steel prices surged 12-15% year-on-year, outpacing cement prices, which rose just 1-5%. Refineries rebounded from an 80% PAT decline in the previous quarter to a 60% increase. Power companies benefited from higher coal costs being passed through merchant power contracts, while capacity expansion plans suggest sustained demand.
Banks reported strong credit growth and improved asset quality, with the State Bank of India (SBI) expecting loan growth of 14-15% in FY27. Non-banking financial companies (NBFCs) saw robust disbursements, particularly in gold loans, though early signs of El Nino's impact on rural financing are emerging. The automobile sector grew 25% year-on-year, but margins contracted due to rising input costs. The IT sector faced headwinds, with Infosys lowering its FY27 guidance due to pricing pressures. The FMCG sector saw healthy growth, though margins narrowed due to elevated costs.