News Brief
Corporate Profits In India Nearly Triple Since Pandemic, Reaching Rs 7.1 Trillion In FY25: RBI Bulletin
Reserve Bank of India (RBI) (Representative Image) (Ramesh Pathania/Mint via Getty Images)
The profitability of Indian companies has nearly tripled since the pandemic, rising from Rs 2.5 trillion in FY21 to Rs 7.1 trillion in FY25, according to analysis by the researchers at the RBI as put out in the October bulletin, The New Indian Express reported.
According to the bulletin, the corporate profit-to-GDP ratio reached a 17-year high of 4.7 per cent.
The bulletin attributed the surge to pandemic-induced but short pent-up demand, manufacturing resilience, and deleveraged balance sheets.
“Large companies emerged as the primary contributors to overall profitability, consistently achieving higher operating profit margins compared to medium and small-sized firms. Despite the pandemic-induced sale declines, companies managed to improve their operating profit margins through effective cost-cutting measures and operational efficiency enhancements during the crisis,” the report said.
SBI chairman CS Setty recently noted that corporate credit growth remains muted as firms are sitting on cash reserves of Rs 13.5 trillion, reducing reliance on bank loans.
The report highlighted that while sales grew 32.5 per cent in FY22, growth normalised to 7.2 per cent by FY25, indicating a shift from rapid recovery to stable growth.
Smaller firms also improved profitability, but large companies drove the overall rebound.
Non-IT services returned to positive net profit territory by FY24, though IT margins moderated due to higher salary expenses.
The report also emphasised deleveraging: “Deleveraging of balance sheet by corporates and improved profitability helped better debt serviceability across the size categories.”
Medium and small firms enhanced debt servicing capacity, supporting financial stability.
“With a robust financial foundation and adaptive strategies, the sector remains well-placed to capitalise on future opportunities and contribute to sustained economic expansion,” the bulletin said.
