Weak Petroleum Segment Drags Manufacturing Output: RBI data

New Delhi, Aug 26 (KNN) The RBI’s Q1 FY2025-26 data on 3,079 listed non-government, non-financial companies shows a slowdown in sales growth, with overall sales rising 5.5% y-o-y—down from 7.1% in the previous quarter and 6.9% in Q1 FY2024-25.

The manufacturing sector, comprising 1,736 companies, saw its sales growth moderate to 5.3% y-o-y, down from 6.6% in Q4:2024-25. The decline was largely driven by weak performance in the petroleum industry, according to the RBI press release.

Expenses of manufacturing companies' on raw materials increased at a slower pace of 4.5% y-o-y, compared to 8.3% in the previous quarter, in tandem with the moderation in sales growth. Consequently, the raw material-to-sales ratio moderated to 54.1% in Q1 from 55.2% in the previous quarter.

In the IT sector, sales growth declined to 6.0% y-o-y from 8.6% in the previous quarter. This marks a reversal of the steady upward trend observed since Q1:2024-25, indicating potential headwinds for the sector, including subdued global demand and pricing pressures.

Non-IT services companies posted 7.5% sales growth in Q1, slowing from double-digit growth recorded in the previous three quarters. The decline was primarily due to lower sales momentum in the transport and storage sub-sectors.

Staff costs for manufacturing, IT, and non-IT services companies rose by 8.3%, 5.8%, and 8.0%, respectively, during Q1:2025-26—lower than the growth recorded in the previous quarter. The staff cost-to-sales ratio for manufacturing, IT, and non-IT services companies inched up to 5.9%, 48.8%, and 10.6%, respectively, during Q1:2025-26.

Operating profit growth for manufacturing and non-IT services companies moderated to 6.9% and 11.3%, respectively, while it improved to 5.4% for IT companies during Q1, compared to the previous quarter.

Consequently, operating profit margins improved sequentially for IT companies during Q1:2025-26, while they moderated for the non-IT services sector. The operating profit margin for the manufacturing sector remained stable during the quarter.

(KNN Bureau)