Indian companies rated by Fitch are expected to report stronger financial performance in FY26, mainly due to better profit margins, even though overall revenue may drop slightly.
Fitch Ratings said that overall revenue for these companies may fall by around 3% in the financial year ending March 2026. This decline is largely due to weaker performance by oil and gas producers, and refiners, which could see revenue drop by high single digits.
However, the good news is that EBITDA margins — a key measure of profitability — are expected to improve from 14% in FY25 to around 16% in FY26. This improvement is thanks to lower input costs, cost-cutting strategies, better mix of products, and stronger pricing power.
Fitch also expects that companies will reduce their debt levels. Median EBITDA net leverage (a debt-to-earnings ratio) is projected to fall from 3.6x in FY25 to 3.1x in FY26, despite ongoing high investments in capital expenditure (capex).
While higher tariffs from the U.S. may create risks, Fitch believes the direct impact on Indian companies will be limited. This is because most Indian firms have low to moderate exports to the U.S. However, there are some risks from more global supply shifting to India and slower global economic growth.
Funding for Indian corporates in FY26 is likely to remain stable. Many firms have enough cash reserves, onshore bond yields are softening, and banks in India have strong balance sheets. Additionally, interest rates may be cut again in 2025, which will support business growth.
With the Indian economy expected to grow steadily, Fitch sees a positive outlook for the financial health of Indian companies in the coming year.
