The Indian industry is expected to report stable revenue growth in the June quarter of the current fiscal year, supported by resilient domestic demand, but the ongoing geopolitical tensions will continue to impact demand sentiments, especially for export-oriented sectors, rating agency ICRA said on Monday.

In a statement, ICRA said it forecasts India Inc's operating profit margins (OPM) at 18.2-18.5 per cent in the first quarter (April-June) FY26, following the sequential recovery over the past few quarters.

This, coupled with a moderation in interest costs, owing to the recent repo rate cuts aggregating to 100 bps, will result in an improvement in the interest coverage ratio for India Inc, it said.

"Given the uncertain global environment, ICRA expects the private capital expenditure cycle to remain measured. However, certain sunrise sectors such as electronics, semi-conductors and niche segments within the automotive space like electric vehicles will continue to see a scale-up in investments," ICRA Senior Vice President Kinjal Shah said.

Entities linked with the Indian Railways and defence sectors would also see their large order books translating into revenues and earnings, Shah added.

"India Inc. is expected to report stable revenue growth in Q1 FY2026 supported by resilient domestic demand -- while rural demand is expected to remain healthy, urban demand looks set to recover supported by income tax relief and easing food inflation," ICRA said.

Nonetheless, the ongoing geopolitical tensions continue to impact demand sentiments, especially for export-oriented sectors such as agro-chemicals, textiles, auto and auto components, cut and polished diamonds, and IT services, it added.

Published on June 16, 2025