For the last few years, Indian companies had a fairly predictable ally on their side: benign input costs. Crude prices stayed manageable, freight rates cooled after the pandemic spike, and commodity inflation largely remained under control.
That cushion is beginning to disappear.
Crude oil prices have surged sharply in recent months amid escalating tensions in West Asia, pushing India’s wholesale inflation to a 42-month high of 8.3% in April 2026. Fuel and power inflation alone jumped nearly 25%, while prices of crude petroleum, metals and manufactured products also moved up sharply.
For India Inc, this creates a familiar problem. Paint companies are dealing with crude-linked raw material inflation. Airlines are battling higher aviation fuel costs. Industrial manufacturers are seeing imported components, transformer oil and logistics expenses rise together. Even consumer companies are once again talking about elevated commodity prices, packaging costs and price hikes.
The tricky part is that revenues can still look healthy during this phase. Demand remains reasonably stable, volumes continue growing and order books stay strong. But margins begin quietly shrinking underneath.
And that usually tells the real story.
Some companies manage to pass costs on quickly. Others absorb the pressure to protect market share. A few get stuck somewhere in between, where growth continues, but profitability weakens quarter after quarter.
That distinction rarely becomes visible in headline revenue numbers immediately. Over time, though, it starts showing up clearly in operating margins, cash flows and valuations.
Here are five companies where rising costs are becoming just as important to track as growth itself.
Shree Cement Ltd
Shree Cement is one of India’s largest cement producers. The company has steadily expanded capacity over the years while building a strong presence across multiple regional markets.
But even cost leaders are not fully insulated when inflation begins creeping back into the system. Rising fuel, freight and packaging costs are once again putting pressure on cement sector margins, just as companies try to defend market share and volumes.
The company’s Q4FY26 sales grew 7.7%, supported by 9.5% volume growth and better cement realizations. Ebitda margins, however, fell to 22.2% from 26.4% a year ago as freight costs rose 16.7% and raw material costs climbed 46.4%. This was on the back of increased lead distance, which pushed transportation costs higher, while pet coke and packaging expenses also remained elevated. Ebitda per tonne declined 17.3% year-on-year.
Going forward, the company expects cost inflation of around ₹150-200 per tonne in Q1FY27, largely because of higher fuel and packaging costs. Management has reduced FY27 capex guidance to around ₹1,500 crore from the earlier ₹3,000 crore plan, with spending focused on railway sidings, RMC expansion and the Meghalaya project. The company also plans to improve utilization levels before accelerating fresh capacity additions.
The stock currently trades at around 51.8 times earnings, in line with its five-year median P/E of 51.5.
Interglobe Aviation Ltd
InterGlobe Aviation, which operates IndiGo, remains India’s largest airline by market share. It is one of the biggest beneficiaries of rising domestic air travel. The airline has steadily expanded its international network as it looks to diversify beyond the domestic market.
But aviation remains a brutally cost-sensitive business. Fuel prices can move far faster than ticket prices, and that usually shows up in margins first.
The company’s December 2025 quarter sales grew 20.4% on-year. Ebitda margins stood at 23%, down from 27% in the March 2025 quarter, as aviation turbine fuel costs and currency pressures weighed on operating costs. Market reports suggest blended fuel costs could rise nearly 50%, while fare hikes were expected to be materially lower. IndiGo increased fuel surcharges across domestic and international routes to partly offset the sharp jump in ATF prices.
Looking ahead, the airline continues to focus on international expansion and network scaling. The March quarter results are expected soon. Investors will closely track commentary around fuel costs, fare hikes and demand trends heading into FY27.
The stock currently trades at 36.5 times earnings, well above its five-year median P/E of 25.7.
Kansai Nerolac Paints Ltd
Kansai Nerolac Paints operates in a business where margins are closely linked to crude oil prices. Paint companies can raise prices for some time. However, if input costs remain volatile for too long, demand and dealer sentiment eventually begin pushing back.
The company enjoys a strong presence across decorative and industrial paints. Additionally, the auto coatings business contributes meaningfully to overall growth. That industrial exposure has helped demand remain relatively resilient even as competition in decorative paints stays intense.
The company’s Q4 FY26 revenue grew 7.6% on-year. Ebitda margins improved to 11.5% from 10.2% a year ago. The improvement came largely because of staggered price hikes taken across March, April and May, along with healthy growth in the auto segment. However, management also indicated that competitive intensity remains high across the sector and further price hikes may be needed if crude-led inflationary pressures continue.
In the future, the company has maintained its Ebitda margin guidance of 13-14% over the near-to-medium term. From now on, additional price hikes are unlikely if crude stabilizes below $100 per barrel. Meanwhile, industrial segment utilization currently remains around 70-75%. Capital expenditure for FY26 stood at around ₹300 crore, largely towards capacity expansion and operational upgrades.
The stock currently trades at 28.1 times earnings, below its five-year median P/E of 44.9.
Voltamp Transformers Ltd
Voltamp Transformers operates in one of the strongest pockets of India’s power-capex cycle. Demand from utilities, EPC players, data centres and industrial customers remains healthy, but the latest quarter showed that even strong demand cannot fully protect margins when raw material inflation spikes sharply.
The company reported a weak Q4 FY26, with revenue declining 1.2% on-year while Ebitda margins contracted sharply by 377 basis points to 14.9%. The pressure came from higher transformer oil prices, rupee depreciation and rising imported component costs amid supply disruptions.
A key issue is the legacy order book. Around ₹750 crore of the ₹1,510 crore backlog was booked before the sharp rise in transformer oil and input costs. Since many of these are fixed-price contracts, management expects near-term margin pressure while these orders are executed. New orders are now being booked at revised prices with safety buffers, which should help stabilise margins going forward.
Despite the weak quarter, demand remains healthy. FY26 order inflows stood at around ₹2,320 crore, while the current order book is about ₹1,200 crore. The new transformer plant, expected to become operational by July 2026, should support growth in higher-capacity transformers up to 220kV initially and later 400kV. Management also highlighted rising traction from data centres and hyperscaler-linked projects.
The company remains debt-free and continues to invest in future capacity, though supply-chain bottlenecks in specialized components remain a key monitorable.
At current levels, the stock trades at around 31x earnings, above its five-year average valuation of 22x.
Crompton Greaves Consumer Electricls Ltd
Crompton Greaves Consumer Electricals reported a weak-looking Q4FY26, but the headline loss was largely due to a one-time accounting hit rather than core business weakness.
The company’s revenue rose 11% on-year, driven by strong growth across fans, pumps, lighting and appliances. The electric consumer durables segment, which contributes nearly 77% of revenue, grew 9.5%, while lighting grew 14.3% on-year.
The problem was input costs. Copper prices moved up sharply during the quarter, squeezing gross margins to 31.6% from 33.9% a year ago. Ebitda margin, consequently, slipped to 11.9% from 12.8%.
The company reported a net loss of ₹537 crore because of a one-time impairment charge related to Butterfly Gandhimathi Appliances and associated trademarks acquired in 2022. Excluding this exceptional item, adjusted profit rose 7% on-year.
Management commentary, however, remained fairly upbeat.
The company highlighted market share gains across fans, pumps and appliances. March 2026 also recorded Crompton’s highest-ever BLDC fan volumes. Smaller appliances like air fryers, infrared cooktops, and premium juicers continued to see healthy traction, while the lighting business showed signs of revival after a prolonged slowdown.
Going forward, Crompton expects margin pressure from raw materials to gradually ease as price hikes flow through the system. The company is also pushing premiumisation through newer launches and its recently launched “Crompton Rhion” portfolio.
The stock currently trades at 53x earnings, a sharp premium to its five-year median P/E of 40x.
Conclusion
Rising costs do not damage businesses immediately. In the early stages, strong demand, healthy order books and steady volume growth can keep the pressure hidden.
But over time, the difference becomes visible.
Some companies manage to protect margins through pricing power and operational discipline. Others continue growing revenues while profitability steadily weakens underneath.
That matters because markets are usually willing to ignore margin pressure for a few quarters. They become far less forgiving if costs stay elevated for longer.
For investors, the challenge is not just spotting growth, but identifying which companies can sustain it without sacrificing their business economics along the way.
Happy investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com