India Inc Q2 Profit Growth Rebounds to 15%: Key Drivers
India Inc’s corporate earnings for the September quarter offered a clear shift in tone. After a muted April to June stretch, profit growth swung back into double digits, giving investors their first real sign that the earnings cycle may be finding its feet again. A broad set of 2,857 companies reported a 15.2% year-on-year increase in net profit, helped partly by the low base of 4.1% a year earlier but also by genuine improvement in several heavy-weight sectors.
The topline picture improved as well. Aggregate revenue rose 8.6%, the strongest in five quarters, recovering from the slowdown seen in the June period. A year ago, the same sample had delivered 7.7% growth. The change is modest, but the directional improvement matters at a time when domestic demand was expected to soften.
What changed in the September quarter for corporate India, and why are analysts sounding more constructive about the months ahead?
The mood across brokerage desks has turned noticeably more upbeat. The festive calendar is front-loaded this year, GST cuts kicked in from 22 September, and the wedding season is likely to support discretionary categories through December. Several analysts have pointed out that the September quarter was not particularly festive-heavy, yet earnings held up. That alone has raised expectations for Q3.
Which Sectors Pulled the Market Forward?
The most meaningful contribution came from oil and gas companies, which logged a 41% jump in profit. Strong refining spreads and better product realisations helped the sector.
Metals followed with 25-40% growth across the datasets, cement delivered a hefty 91% rise, and capital goods grew 18% as order execution improved. Telecom also flipped from a loss last year to a profit this time around.
A broader look at the market shows the recovery is not limited to a handful of names. Roughly one in five BSE 500 companies posted a sharp rise in bottom lines, with 108 of them doubling profits.
The outperformance in the mid and small-cap universe was even more striking. Suprajit Engineering’s earnings jumped 10,492%, Manali Petrochemicals rose 8,975%, and Westlife Foodworld came in at 7,662%. Renewable energy companies dominated the high-growth list: Vikram Solar posted 1,646% profit growth and Suzlon Energy delivered 538%, aided by strong inflows and improving balance sheets.
Public sector firms such as BHEL led the infrastructure-heavy basket with 303% growth. Refiners like HPCL and BPCL turned in 586% and 241% gains, respectively. Telecom remained resilient as Bharti Airtel reported 178% growth supported by higher ARPUs and 5G adoption.
Did Consumption Recover as Well?
Consumer-facing categories had a more uneven run. FMCG, staples, durables and discretionary spending did not keep pace with the broader market. Part of this was timing. The GST rate changes disrupted stocking patterns, and retailers delayed purchases in anticipation of newer, lower-priced inventory. Some of that demand is expected to spill over into Q3, especially with the wedding season stretching into early January.
Margins told their own story. The aggregate operating margin for the sample stayed flat year-on-year at 17.9% but fell 190 basis points sequentially due to seasonal weakness. Cost pressures were visible in sectors like automobiles and aluminium, where rising metal prices - aluminium was up 11% - affected profitability. Pharma also faced 1.5 - 2% margin compression as export markets remained competitive.
On the other hand, cement, steel, and telecom managed margin expansion supported by better realisations and healthier volume growth.
Banks and financials acted as a mild drag on the broader numbers. Interest rate cuts slowed the pace of net interest income expansion, which weighed on the consolidated print for the market.
Excluding lenders, revenue and profit growth for the remaining companies came in stronger at 9% and 20.9%.
How do Industry-Level Indicators Line Up with Corporate Results?
Crisil’s analysis of 600 companies for the July to September period highlighted similar dynamics. Revenue rose 5–6% year-on-year, a step up from the June quarter, although profitability softened due to higher input costs in autos, pharma, and aluminium.
The agency noted muted trends in power, coal, and IT services. IT revenue grew just 1% as project deferrals persisted. Steel saw a 4% rise in revenue despite a 9% increase in volumes because prices remained weak.
Interestingly, the rural economy held up better. A good monsoon and improved farm sentiment helped tractor revenue surge 36% and two-wheeler revenue rise 9%, suggesting that pockets of consumption outside urban centres may recover earlier than expected.
Cement, pharma, and telecom continued to show consistency with 7–8% topline growth for the quarter.
What Should Investors Expect in Q3?
Most analysts expect the December quarter to look better. The demand tailwinds are straightforward: a busier festive period than Q2, favourable monsoon patterns, improved GST clarity and a softer inflation backdrop.
Some brokerages believe the earnings cycle has already “bottomed out” and is set to accelerate through the second half of FY26. Valuations remain manageable with the Nifty trading near its long-period average.
Risks do remain. The global environment is still fluid, cost pressures have not fully eased, and the pending US-India trade discussions could influence export-heavy sectors. But the underlying earnings momentum appears stronger than it did even three months ago.
Can India Inc carry this momentum into the December quarter and turn a promising recovery into a steady trend for the rest of FY26?