The operating profit margin as well as net profit margin of private sector corporates in India improved across major sectors during 2023-24 while their debt burden declined during the year, reflecting the growing financial strength, according to the latest data compiled by the RBI.
“The operating profits rose by 15.3 per cent during 2023-24 from 4.2 per cent growth during the previous year, at aggregate level. The operating profit growth of the manufacturing and services sector stood at 13.2 per cent and 15.5 per cent respectively, during 2023-24, from (-) 3.9 per cent and 16.8 per cent growth in 2022-23,” according to the RBI report.
The profit after tax increased by 16.3 per cent during 2023-24; services sector companies recorded much higher post-tax profit growth of 38.1 per cent when compared to that in the manufacturing sector’s 7.6 per cent.
Reserve Bank released the data relating to the financial performance of non-government non-financial (NGNF) public limited companies during 2023-24 based on audited annual accounts of 6,955 companies.
The leverage of these companies, as measured by the debt-to-equity ratio, continued to moderate during 2023-24, according to the report.
The interest coverage ratio (ICR) improved to 4.1 during 2023-24 as growth in gross profit outpaced the growth in interest expenses; ICR of manufacturing companies remained stable at 6.3, while it improved marginally to 3.2 for services companies, the RBI said.
The share of internal sources accounted for over two-thirds of the total funds of the sample set of public limited companies during 2023-24, mainly due to a rise in reserves and surplus, the report further stated.
The gross fixed assets of these public limited companies increased by 10 per cent during 2023-24; manufacturing companies, chemicals, pharmaceuticals, electrical equipment, motor vehicles and other transport vehicles sectors recorded higher growth in fixed assets, according to the RBI.
The report further highlighted that the operating profit growth of private limited companies, which are not listed on the stock exchanges, also accelerated during 2023-24, at the aggregate level as well as for the manufacturing and services sectors. Consequently, profit margins, as measured by ratios of operating profit and profit after tax to sales improved during 2023-24.
At the aggregate level, leverage (in terms of debt-to-equity ratio) of the sample of these companies stood close to its level a year ago at 45.2 per cent in March 2024; electricity gas steam and air conditioning supply and construction including civil engineering continued to remain highly leveraged, though some moderation was seen during 2023-24, the report pointed out.
At the aggregate level, the ICR improved to 3.1 during 2023-24 from 2.7 in the previous year; the ICR of manufacturing and services sectors also improved and stood at 8.3 and 2.7, respectively, it added.
