Sectoral Gains Uneven As RBI Rate Cuts Ease Corporate Debt Burden, Says A BoB Report

Interest rates were recently reduced by the Reserve Bank of India (RBI). What is the implication for companies? In layman’s terms, borrowing money is now cheaper, and as a result, many businesses can repay their loans more easily. A report by the Bank of Baroda (BoB) suggests that this is helping some industries improve their financial health.

Now, the only trouble is that not everybody is lucky enough to share a piece of this good news. The industries benefiting the most are some such as crude oil and banking. Others are not seeing as much improvement. Thus, while many firms are improving, a handful of large firms is making the majority of the gains.

What do you suppose this implies for the economy in general? It shows that RBI’s action is useful, yet the gains are not balanced. Monitor the reaction of various sectors in the coming months!

Moderate Sales Growth Amid Lower Expenditures

According to the report, net sales of a sample of 2,545 companies increased by 4.9 percent in the first quarter of Financial Year 2026 (Q1 FY26). In the same period last year, sales had increased by 10.6 percent. Expenditure growth remained modest at 4.3 percent compared with 8.7 percent in Q1 FY25. Interest costs registered a growth of 9.6 percent in Q1 FY26, compared with 23.8 percent in Q1 FY25. Since February 2025, the central bank has lowered the repo rate by 100 basis points. The report noted that the companies’ profit growth remained stable at 11 percent.

Uneven Impact Across Sectors

Pointing to the uneven impact, the report highlighted that this is especially true for crude oil and the BFSI (Banking, Financial Services, and Insurance) segment. According to the report for the non-BFSI segment, growth in net sales was recorded at 3.6 percent in Q1 FY26, and in Q1 FY25, net sales rose by 7.2 percent. Expenditure and interest costs were lower, resulting in an improvement in profitability. For the ex-BFSI companies, PAT growth was 13.3 percent in Q1 FY26, compared with 5.7 percent in Q1 FY25, the report added. However, these results have been skewed by a single large company in the crude oil sector, the report added.

Positive Outlook Supported By Multiple Factors

The report further noted that excluding these sectors, the net sales growth for the non-BFSI segment stands at 4.7 percent (7.2 percent in Q1 FY25), while PAT growth was 8.3 percent in Q1 FY26, compared to 7.1 percent in the same period last year. The report noted that the management commentary of the companies indicates a recovery is underway, with the outlook remaining largely positive. A normal monsoon, festive demand, low inflation, reduced interest rates, and income tax benefits will support demand recovery, the report added. Infrastructure and related sectors will continue to benefit from the government’s capital expenditure push. Export-oriented sectors have navigated the challenging external environment reasonably well and remain well-positioned to face any future challenges. At the same time, service-linked industries continue to post a steady growth performance, according to the report.

“This suggests that we can expect a gradual improvement in the next few quarters,” noted the report.

(Disclaimer:This article contains syndicated news from ANI and is intended for informational purposes only. It should not be construed as financial or investment advice. Please consult a financial advisor before making investment decisions.)

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