New Delhi, Sept. 3 -- India Inc. started fiscal year 2027 (FY27) on a strong footing, with revenue and profit growth accelerating sharply in the June quarter. But the recovery is already showing a fault line: operating margins are weakening even as headline earnings strengthen, raising questions about how broad and durable the upturn will be.

Companies in PL Capital's coverage universe delivered their strongest sales and profit growth in more than two years in the June quarter (Q1FY27). The universe, excluding oil and gas companies, reported 15.5% sales growth in Q1FY27, the highest since Q4FY24. Net profit growth, at 17%, was also the highest since Q4FY24.

Yet Ebitda (earnings before interest, taxes, depreciation and amortization) grow...