The Reserve Bank of India (RBI) released data on Wednesday showing that listed private non-financial companies achieved a double-digit sales growth of 10.1% during the financial year 2025-26, marking a rebound after two years of single-digit expansion. The strong performance was primarily fueled by a robust recovery in the manufacturing sector.
Manufacturing Sector Leads the Charge
The RBI's assessment, based on the abridged financial results of 4,278 listed non-government non-financial (NGNF) companies, revealed that the acceleration in overall sales growth was mainly led by substantial improvement in manufacturing sector performance. According to the RBI, sales of manufacturing companies expanded by 10.8% during 2025-26, compared with 6.0% growth in the previous year.
The growth was largely supported by key industries such as automobiles, electrical machinery, food and beverages, and chemicals. However, the petroleum industry continued to witness contraction in sales during the year.
Services Sector Shows Mixed Results
Sales growth of information technology (IT) companies improved to 7.9% during 2025-26 from 7.1% a year earlier. Non-IT services companies continued to record double-digit sales growth, driven by healthy performance in the wholesale and retail trade industry.
On the expenditure side, raw material expenses of manufacturing companies increased by 12.0% during 2025-26. The raw material-to-sales ratio rose to 57.6% from 55.7% in the previous year, indicating input cost pressures for manufacturers.
Staff Costs and Profitability Trends
Staff costs increased by 10.7% for manufacturing companies, 6.1% for IT firms, and 9.0% for non-IT services companies during the year. However, the staff cost-to-sales ratio remained broadly stable for manufacturing companies and declined for services firms.
Despite higher input costs, manufacturing companies were able to improve profitability. Operating profit growth in the manufacturing sector rose to 10.3% during 2025-26 from 6.0% in the previous year. Within the services sector, operating profit growth for non-IT services companies slowed to 7.1%, while IT companies recorded an improvement to 10.7%.
Profit Margins and Debt Servicing
The RBI noted that operating profit margins for manufacturing and non-IT services companies declined by 30 basis points and 210 basis points, respectively, to 13.9% and 20.0%. In contrast, IT companies saw their operating profit margin improve by 50 basis points to 22.4%.
The data further showed that manufacturing companies strengthened their debt-servicing position during the year. The interest coverage ratio improved to 9.1 in 2025-26 from 7.9 in the previous year, supported by higher gross profits and lower interest expenses.
