Representative image for sales growth
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Bengaluru: Sales of listed private non-financial companies rose by 5.5% year-on-year (YoY) during the first quarter ended June 2025 as compared to 7.1% growth in the previous quarter (6.9% in Q1FY25).
Aggregate sales growth (YoY) of 1,736 listed private manufacturing companies moderated further to 5.3% during Q1FY26 from 6.6% in the previous quarter, mainly dragged by weak performance of the petroleum industry, according to the data available on the Reserve Bank of India (RBI) website.
Sales growth (YoY) of IT firms declined to 6% during Q1FY26 from 8.6% in the previous quarter, reversing the upward trend seen since Q1FY25.
Sales growth of non-IT services companies moderated to 7.5% in Q1:2FY26, after recording double-digit growth in the previous three quarters, primarily due to lower sales growth recorded by the transport and storage companies.
Manufacturing companies’ expenses on raw material increased at a slower pace of 4.5% (YoY) as compared to 8.3% during previous quarter, in tandem with moderation in sales growth; consequently, raw material to sales ratio moderated to 54.1% during Q1 from 55.2% in the previous quarter (Table 2A and 2B).
Staff cost of manufacturing, IT and non-IT services companies rose by 8.3%, 5.8% and 8%, respectively, during Q1FY26, lower than the growth recorded during the previous quarter. Staff cost to sales ratio for manufacturing, IT and non-IT services companies inched-up to 5.9%, 48.8%, and 10.6%, respectively, during Q1FY26 from the previous quarter.
Operating profit growth of manufacturing and non-IT services companies moderated to 6.9% and 11.3%, respectively, while it improved to 5.4% for IT companies during Q1 from the previous quarter.
Consequently, operating profit margins improved sequentially for IT companies during Q1FY26, while it moderated for non-IT services sector; operating profit margin for the manufacturing sector remained stable during the quarter.
With sequential rise in profits, manufacturing companies’ interest coverage ratio (ICR)1 improved to 9.1 in Q1FY26 from 8.7 in the previous quarter. Within the services sector, while ICR of non-IT services companies remained stable, ICR of IT firms continued to remain at elevated levels during Q1FY26.