Net sales of 2,257 listed non‑BFSI companies rose by 24% year‑on‑year in the first quarter of FY27, but operating profitability lagged behind revenue growth as higher input costs compressed margins, according to a quarterly review by SBI Research.
Topline growth broad‑based, led by gems, trading and autos
The SBI Research sample shows a sharp recovery in revenue activity across consumer, industrial and trading segments. At the sector level, Diamond, Gems & Jewellery recorded the strongest sales expansion at 45%, followed by Trading at 40% and Automobiles at 30%. The numbers indicate that demand momentum was not limited to a single category.
- Sales (YoY): +24% for the 2,257 companies covered.
- EBITDA (YoY): +9% overall.
- PAT (YoY): +4% overall.
Margins under pressure as input costs rise
While aggregate earnings expanded, operating margins showed a clear moderation. The combined EBITDA margin for the sample slipped to 14.9% in Q1 FY27 from 16.8% in Q1 FY26 and 16.2% in Q4 FY26. SBI Research attributed the decline mainly to rising input expenses that companies could not fully pass on to customers.
Sectoral margin moves were mixed. Healthcare suffered the steepest year‑on‑year margin contraction of 2.8 percentage points, while Cement and Entertainment saw falls of 2.2 and 2.1 percentage points respectively. On the other hand, Chemicals delivered a robust margin expansion of 2.8 percentage points; Textiles, Steel and Diamond, Gems & Jewellery also posted improvements.
| Metric | Q1 FY27 (YoY) |
|---|---|
| Net sales (sample) | +24% |
| EBITDA | +9% |
| PAT | +4% |
| EBITDA margin | 14.9% (Q1 FY26: 16.8%; Q4 FY26: 16.2%) |
Sector winners and laggards
Growth leadership at different layers of the income statement highlights differing sector dynamics:
- Sales growth leaders: Diamond, Gems & Jewellery (45%); Trading (40%); Automobiles (30%).
- EBITDA growth leaders: Diamond, Gems & Jewellery (54%); Chemicals (48%); Realty (41%).
- PAT growth leaders: Chemicals (64%); Textiles (63%); Diamond, Gems & Jewellery (60%).
The divergence between revenue and margin trends suggests that while demand supported turnover, rising commodity and intermediate input costs ate into operating leverage for many firms. SBI Research pointed to cost pressures as the primary reason for the aggregate margin contraction.
What this means for stakeholders
For businesses, the report underlines the challenge of sustaining profitability in an environment of elevated input costs. Sectors with pricing power or lower cost pass‑through saw margin expansion, while more price‑sensitive industries experienced compression.
For investors, headline sales growth is encouraging but the softer PAT increase (4%) and narrower margins counsel caution when interpreting earnings strength. The gap between sales and bottom‑line growth indicates earnings quality varied widely across sectors.
For policy makers and economists, the pattern—healthy revenue growth alongside margin squeeze—signals resilient domestic demand but rising cost inflation in corporate supply chains. Monitoring how companies manage input inflation and pass‑through to consumers will be important for near‑term inflation and growth dynamics.
“The review placed corporate earnings performance alongside other indicators of economic activity,” SBI Research said.
Overall, the Q1 snapshot from SBI Research portrays a corporate sector that is expanding top‑line activity but wrestling with profitability headwinds. For households and markets, that combination implies continued availability of goods and services backed by corporate activity, but a watchful eye is needed on price pressures and their transmission into margins and retail prices.
Report data as reported by SBI Research for 2,257 listed non‑BFSI companies in Q1 FY27.
