The latest numbers on the private corporate sector’s performance in Q3 FY2024-25 paint a picture of cautious optimism. With an 8% year-on-year sales growth, up from 5.4% in the previous quarter, it seems Corporate India has found its rhythm. The manufacturing sector, which had been dragging its feet, has finally picked up, led by robust performances in automobiles, chemicals, and food products. But scratch the surface, and the challenges become evident.

These numbers are from the Reserve Bank of India (RBI)’s data on the performance of the private corporate sector during the third quarter of 2024-25, drawn from abridged quarterly financial results of 2,924 listed non-government non-financial companies.

The rise in sales does not tell the full story. Petroleum, iron and steel, and cement industries saw revenue contraction, pointing to the uneven nature of this recovery. While some industries are benefitting from improved demand and pricing power, others are struggling with global headwinds, high input costs, and sluggish exports.

The IT sector has also seen a rebound, with 6.8% growth, nearly doubling from the previous year’s figure, but the real star remains the non-IT services sector, which posted 11.5% sales growth—a strong indicator of domestic consumption resilience.

However, growth comes at a cost. Manufacturing companies’ staff costs surged by 9.5%, outpacing raw material cost increases. In non-IT services, staff expenses soared 12.4%, reflecting rising wage pressures. While these numbers signal a healthy job market and a higher wage bill, they also hint at possible stress on corporate profitability if revenue growth slows.

Still, pricing power is holding up. The operating profit margin improved to 16.2%, reflecting companies’ ability to pass on costs. But can this continue? The real test will come if inflationary pressures persist or if the demand recovery stalls.

A crucial metric that signals corporate health is the Interest Coverage Ratio (ICR)—which measures a company’s ability to service debt. For manufacturing firms, ICR dipped slightly to 7.6, indicating they are still comfortably covering interest payments, but the trend is one to watch. In contrast, the non-IT services sector finally crossed an ICR of 2 after 32 quarters—a sign that businesses in this segment are finally coming up for air after years of financial stress.

So, what does all this mean for India Inc.? The Q3 numbers suggest that corporate growth is accelerating, but it remains selective, uneven, and vulnerable to external shocks. With global trade uncertainties, fluctuating commodity prices, and the unpredictability of monetary policy, sustaining this growth will require more than just favorable demand conditions. Corporate India must stay agile, control costs, and invest strategically to ensure that this momentum is not just a quarterly blip, but a sustained recovery.

The coming quarters will separate the real winners from those merely riding the wave.