(MENAFN- IANS) New Delhi, Aug 26 (IANS) India Inc. is expected to clock a modest year-on-year revenue growth of 5-6 per cent in the second quarter of FY2026 (Q2 FY26), compared with 5.5 per cent growth recorded in Q1 FY26, a report said on Tuesday.

The growth is likely to be supported by healthy rural demand, premiumisation and ongoing value shift towards organised players, said the report from credit rating agency ICRA.

As a result, the report outlined that the credit metrics of the country are also expected to remain stable, with the interest coverage ratio estimated between 4.9 and 5.1 times, against 4.9 times in Q1 FY2026.

"Operating profit margin (OPM) is expected to show resilience as commodity prices soften on a YoY basis. Interest coverage ratio could improve slightly in Q2 FY2026 benefitting from the festive season demand impulses and greater transmission of policy rate cuts on the borrowing rates," the report said.

ICRA predicted a steady OPM in the range of 18-18.2 per cent on a YoY basis. The revenue growth was led by consumption-oriented sectors such as consumer durables, retail, hotels, gems and jewellery, along with infrastructure-oriented sectors like capital goods, cement and construction. These sectors saw muted performance in Q1 FY2025 due to the Parliamentary elections.

The report, however, cautioned that the structure of the proposed GST rationalisation is still uncertain, and the prospects of lower prices may cause some discretionary purchases to be delayed to the next quarter.

The product mix change in several sectors is supporting headline revenue growth at a time when volume growth has been soft. Organised players in sectors like hospitality, hospitals, and jewellery retail are expanding their footprint through a mix of acquisitions and other commercial arrangements supporting overall revenue growth, the report noted.

MENAFN26082025000231011071ID1109976739