Automobile and Electrical Machinery Drive Q4 Sales Growth for Listed Firms

The Indian private manufacturing sector showcased robust momentum in the final quarter of FY2025-26, with sales growing by 14.5 per cent. Driven by strong performance in heavy industries, this surge highlights a resilient recovery across key manufacturing segments despite rising input costs.

Manufacturing Sector Sees Accelerated Sales Growth

According to the latest data released by the Reserve Bank of India (RBI), sales for 1,817 listed private manufacturing companies expanded by 14.5 per cent year-on-year (YoY) during the January-March 2025-26 quarter. This represents a significant acceleration compared to the 11.4 per cent growth recorded in the preceding quarter.

The expansion was not uniform across all sectors but was spearheaded by high-growth industries. Specifically, the automobile, electrical machinery, and non-ferrous metals sectors emerged as the primary engines of this growth. This trend suggests a strengthening of the industrial core and increased demand in capital goods and consumer durables.

The service sector also displayed a bifurcated growth pattern during the fourth quarter. Information Technology (IT) companies saw a steady improvement in sales growth, which rose to 9.9 per cent YoY, up from 8.8 per cent in the previous quarter.

In contrast, the non-IT services segment experienced a substantial surge, with sales growth jumping to 20.3 per cent. This massive expansion was primarily propelled by the wholesale and retail trade industry, indicating strong domestic consumption and efficient supply chain movements during the period.

Rising Input Costs and Margin Pressures

While sales figures remained impressive, the RBI report highlighted growing concerns regarding profitability and cost management. Amidst global uncertainties, manufacturing companies faced a significant spike in raw material expenses, which rose by 18.3 per cent YoY during Q4FY26.

This increase in procurement costs has put pressure on margins, as evidenced by the raw material-to-sales ratio rising to 58.5 per cent, compared to 57.5 per cent in the previous quarter. While the operating profit margins for manufacturing companies remained stable on a sequential basis, the services sector witnessed a moderation in margins during the January-March period.

On the labor front, staff cost growth for manufacturing companies moderated to 9.8 per cent YoY. However, within the services sector, staff cost growth for non-IT companies rose at a much higher pace, while IT companies maintained relatively stable employee-related costs compared to the previous quarter.

Key Takeaways