By pointing out the unequal impact, the report emphasized that this is the case in particular for crude oil and the BFSI segment (bank, financial services and insurance).
The decision of the reserve Bank of India to reduce interest rates has led to a clear decrease in loan costs for companies, which increases the usability of debts in different sectors, according to a report from the Bank of Baroda (BOB).
However, the report also noted that the benefits are not evenly distributed, with a few important industries that disproportionately influence the overall trend.
According to the report, the net turnover of a sample of 2,545 companies increased by 4.9 percent in the first quarter of the financial year 2026 (Q1 FY26).
In the same period last year, sales had risen by 10.6 percent. The growth of expenditure remained modest with 4.3 percent compared to 8.7 percent in Q1 FY25. Interest costs registered a growth of 9.6 percent in Q1 FY26, compared to 23.8 percent in Q1 FY25.
Since February 2025, the Central Bank has reduced the REPO rate with 100 basic points. The report noted that the profit growth of the companies remained stable with 11 percent.
By pointing out the unequal impact, the report emphasized that this is the case in particular for crude oil and the BFSI segment (bank, financial services and insurance).
According to the report for the non-BFSI segment, the growth of net turnover was registered at 3.6 percent in Q1 FY26 and in Q1 FY25 the net turnover increased by 7.2 percent.
The expenditure and interest costs were lower, which resulted in an improvement in profitability. For the ex. BFSI companies, Pat growth amounted to 13.3 percent in Q1 FY26, compared to 5.7 percent in Q1 FY25, added the report.
However, these results are crooked by a single large company in the crude oil sector, the report added.
The report also noted that net turnover growth for the non-BFSI segment with the exception of these sectors is 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 that a recovery is underway, whereby the outlooks remain largely positive.
A normal monsoon, festive demand, low inflation, lower interest rates and benefits for income tax supporting the recovery of demand, the report added. Infrastructure and related sectors will continue to benefit from the government’s capital expenditure.
Export -oriented sectors have navigated reasonably well due to the challenging external environment and remain well positioned to meet future challenges.
At the same time, according to the report, service -related industries continue to book steady growth performance.
“This suggests that we can expect a gradual improvement in the coming quarters,” the report noted.
Published on August 28, 2025
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