Raw material expenses of listed manufacturing companies surged 18.3% year-on-year in the January-March quarter of FY26, highlighting growing input cost pressures amid global uncertainties.
The raw material-to-sales ratio rose to 58.5% in Q4 FY26 from 57.5% in the preceding quarter, signalling that a larger share of revenues was being absorbed by input costs, according to Reserve Bank of India (RBI) data released on Tuesday.
The increase in input costs came despite a strong improvement in sales. Aggregate sales growth of 3,266 listed private non-financial companies accelerated to 13.9% year-on-year in Q4 FY26 from 10.1% in the previous quarter, while manufacturing companies recorded sales growth of 14.5%, driven by automobiles, electrical machinery and non-ferrous metals.
However, rising raw material expenses weighed on profitability. Operating profit growth of manufacturing companies moderated to 9.4% in Q4 FY26 from 11.8% in the previous quarter as companies faced a significant increase in input costs.
Employee costs showed a mixed trend across sectors. Staff cost growth in manufacturing moderated to 9.8% year-on-year, while non-IT services companies saw staff expenses rise at a faster pace of 8.9%. Staff cost-to-sales ratios for manufacturing and non-IT services firms eased to 5.3% and 9.4%, respectively.
The services sector reported stronger growth. Sales growth of IT companies improved to 9.9% from 8.8% in the previous quarter, while non-IT services companies posted sales growth of 20.3%, aided by wholesale and retail trade. Operating profit growth for IT and non-IT services firms increased to 14.1% and 6.5%, respectively.
On the financial health front, manufacturing companies' interest coverage ratio improved to 9.5 in Q4 FY26 from 9.0 in the preceding quarter, indicating better debt-servicing capacity despite margin pressures.