Indian companies posted their fastest profit growth in over two years in the September quarter, but much of the gain came off a weak base, while surging oil, freight and metal prices threaten to squeeze margins from the December quarter.
Mint’s analysis of 356 companies’ standalone results shows that net profit rose 27% year-on-year in the September quarter (Q2 FY27), compared with a 9% increase in the year-earlier quarter. This was the cohort’s strongest profit growth in 10 quarters, even as input expenses climbed to multi-quarter highs.
Elevated oil, freight and metal prices threaten to push up costs for companies across sectors in the coming months. While some businesses have raised prices to protect margins, their ability to pass on further increases varies, setting the stage for a more uneven earnings performance in the coming quarters.
Experts attribute part of the September-quarter recovery to a sharp turnaround in oil marketing companies (OMCs), which swung from a cumulative loss of nearly ₹13,600 crore in the June quarter to a profit of around ₹12,700 crore in the September quarter. OMCs accounted for 6.7% of the overall Q2 profit pool.
The turnaround was supported by relatively subdued crude prices for much of the quarter, price increases of ₹5-8 per litre for petrol and diesel by state-owned fuel retailers, and government compensation for losses on subsidized liquefied petroleum gas sales.