Private non-financial companies demonstrated robust performance in Q1FY27, with sales growth accelerating to 19.4% year-on-year during the first quarter of 2026-27, according to Reserve Bank of India data. This represents a significant improvement from 13.9% in the previous quarter, indicating strong momentum in the private corporate sector. The acceleration was particularly pronounced among manufacturing companies, which expanded by 21.4% year-on-year during Q1FY27, up from 14.5% in the previous quarter. Total sales reached ₹21.6 lakh crore in Q1FY27, marking a sharp increase from 5.5% growth in Q1FY26 and 13.9% in Q4FY26. However, the improvement was less impressive at the bottom line as net profit grew 14.1% year-on-year to ₹2.3 lakh crore, slower than the 17.6% growth in Q1FY26 and 27.1% in Q4FY26.
The manufacturing sector's strong performance was primarily driven by the automobiles, petroleum and electrical machinery industries, as reported by the Reserve Bank of India. Information Technology companies also showed impressive growth, with sales growth strengthening to 14.8% year-on-year in Q1FY27, up from 9.9% in the previous quarter. Non-IT services companies maintained healthy performance with double-digit growth of 19.7%, though slightly down from 20.3% in the previous quarter, mainly driven by the wholesale and retail trade industry. Labour costs also gathered steady pace, with staff costs rising 12.4% for manufacturing, 7.6% for IT, and 11.2% for non-IT services companies in Q1FY27. Staff cost as a share of sales increased to 5.5% for manufacturing companies and 10.1% for non-IT services companies, while IT companies saw their ratio decline from the previous quarter.
Despite strong sales growth, manufacturing companies faced significant input cost pressures due to global supply chain disruptions, with raw material costs increasing 25.3% year-on-year during Q1FY27, accelerating from 4.8% and 17.8% in the two preceding periods. Power and fuel expenses rose 19.3%, reversing declines of 6.1% in Q1FY26 and 4.7% in Q4FY26. However, companies successfully managed these costs, with the raw material to sales ratio declining marginally to 58.1% during Q1 from 58.5% in the previous quarter. Total expenditure rose 20.8% in Q1FY27, compared with 5.2% in Q1FY26 and 15.1% in Q4FY26. Tax provisions recorded the sharpest increase, rising 26.3% year-on-year, while interest expenses were the lone major expense category to decline, falling 0.4% year-on-year in Q1FY27.
Operating profit growth showed remarkable improvement across all major sectors during Q1FY27. Manufacturing companies' operating profit growth surged to 21.3% year-on-year from 9.4% in the previous quarter, demonstrating strong operational momentum despite substantial raw material cost increases. Operating profit growth at IT companies improved to 19.9%, while non-IT services companies recorded operating profit growth of 12.7%. The divergence between strong operating performance and slower net profit growth suggests that companies retained considerable operating momentum but faced constraints from supply-chain disruptions and tax provisions. There was also evidence that companies retained some pricing power despite the squeeze on inputs, with operating profit growth at manufacturing companies accelerating sharply to 21.3% year-on-year from 9.4% in the previous quarter.
