GST RATIONALIISATION POSSIBILITY May Cause Some Discretionary Purchasses to be delayed: icra

The Prospects of Lower Pries due to Likely GST Rationalization May Cause Some Discretionary Purchasses to be delayed from the second half of Q2. Cold Cause a Blip in the Demand Momentum in some sector, according to icra.

The creedit rating agency noted that ongoing geopolitical tensions and steep us tarifs continue to impact demand sentiments, especially for export-oriented sectors such as agro-chamistals, textiles, Auto and Auto Components, Seafoods, Cut and Polished Diamonds and It Services.

India Inc. is poised for a steady revenue growth of 5-6 per cent yoy (year-on-yar) in q2 fy2026 (5.5 per cent in q1 fy2026) Supported by healthy demand, structural factories like premimization and the ongoing Value Shift Towards Organized Players

Coupled with Softening of input costs like crude oil and coal, this will result in a steady operating Profit Margin (OPM) in the range of 18-18.2 per cent on a yoy basis.

As a result, the credit metrics of India inc. In Q2 fy2026 are likely to remain larger stable, with the interest coverage ratio at 4.9-5.1 times, Benefitting from the festive season demand impulses and green cuts of green cuts on the borrowing Rates, Against 4.9 Times in Q1 FY2026, opined the agency.

Kinjal Shah, Senior Vice President & Co-Group Head-Corporate Rating, ICRA, Observed that While Domestic Rural Demand Remains Resilient, Urban Demand is Yet to Recover.

“Despite Tailwinds Like Income Tax Relief and Esing Food Inflation, Recovery in Sentments would be the key for Pickup in Urban Demand. In that Context, The Expected GSTS COTS COTS COULD SOME SOME SOME SOME SOME SOME SOME SOME SO Demand, “Shah said.

Premiumization of consumption

The agency assessed that while the overall urban demand growth has been over the past 18 months, Premiumsation of Consumption is Apparent Across Sext Across Sext Categories – From Automobiles to FMCG to watches.

“The product mix change is supporting headline risen at a time when Volume growth has been soft. Likweise, Organized Players in Sectors like Hospitality, Hospitals, Hospitals and Jewellery Retament Are expanding their footprint through a mix of acquisitions and other commercial arranges, supporting overall revneue growth, “ICRA said.

Investment Activity

The agency said certain sectors such as Electronics, Semi-Conductor and Niche Segments with the Automotive Space Like Electric Vehicles will containneue to See Append

Further, Government Capital Expenditure is expected to support to support the overall investment activity, although the headroom for growth is likely to be lower in Quarters of Quarters of this year, AFFRONTING SEENTING SEENTING SEEN SEEN FY2026.

Published on August 26, 2025