The post-Covid pandemic boom in corporate revenues appeared to have faded away in 2023-24.
Yet, companies have reported a sharp recovery in their profits in FY24, driven by high margins.
Their combined net sales, including gross interest income for lenders, rose by a modest 4.8 per cent year-on-year (Y-o-Y) in FY24.
This growth rate, the slowest in the past three years, is a stark contrast to the 22.5 per cent Y-o-Y growth witnessed in FY23.
Business Standard’s analysis is based on a common sample of 1,057 companies from the BSE 500, BSE Midcap and BSE Smallcap indices.
It excludes the listed subsidiaries of other listed companies in the sample.
Non-financial companies fared worse.
The combined net sales of 939 companies, excluding those in the banking, financial services and insurance, and stock broking sector (BFSI sector), grew by 1.8 per cent Y-o-Y in FY24, a decline from the 23.4 per cent Y-o-Y growth in FY23.
Similarly, the combined net sales of 924 companies, excluding those in the BFSI and oil & gas (including Reliance Industries) sectors, increased by 4.5 per cent Y-o-Y in FY24, decelerating from the 19.3 per cent Y-o-Y growth in FY23.
Despite this slowdown, the combined net sales of all companies in Business Standard’s sample have grown at a compound annual growth rate (CAGR) of 8.9 per cent in the FY19-24 period.
This is an improvement from the 6.1 per cent CAGR growth in the FY14-19 period, but still lower than the 14.7 per cent CAGR growth during FY09-14.
Similarly, the combined net sales of ex-BFSI firms grew at a CAGR of 8.6 per cent in FY19-24, up from 5.7 per cent in FY14-19, but slower than 14 per cent CAGR growth reported during FY09-14.
Notwithstanding slowing sales, companies reported sharp recovery in earnings in FY24.
Companies reaped the benefits of lower raw material and energy prices, pushing profit margins to a 15-year high.
The combined net profit (adjusted for exceptional gains and losses) of all companies in the sample was up 24.9 per cent Y-o-Y in FY24, an improvement from the 9.2 per cent Y-o-Y uptick a year ago.
The combined net profit of ex-BFSI companies was up 26.2 per cent Y-o-Y in FY24, a sharp turnaround from a 3.6 per cent Y-o-Y decline in FY23.
In comparison, the combined net profit of companies (ex-BFSI and oil & gas) was up 19.4 per cent Y-o-Y in FY24, against a 0.4 per cent decline in FY23.
The earnings growth in FY24 was largely a play of margins.
The earnings before interest, depreciation, tax, and amortisation (Ebitda) margin of all companies in the sample increased to 27.4 per cent of total revenues in FY24 — the highest in the past 15 years and up 420 basis points from 23.2 per cent of revenues in FY23.
Similarly, these companies’ net profit (adjusted) margin expanded to 9 per cent of revenues in FY24 — the best since FY09 and up 240 basis points from 7.6 per cent of revenues in FY23.
In comparison, their net profit margin has been 6.6 per cent on average since FY09.
The combined adjusted net profit of listed companies in the sample jumped to an all-time high of Rs 12.32 trillion in FY24, up from Rs 9.87 trillion a year ago.
In comparison, the combined net profit of companies excluding those in the BFSI space increased to Rs 8.09 trillion in FY24, from Rs 6.4 trillion a year ago.
The combined net profit of ex-BFSI and oil & gas firms increased to Rs 5.96 trillion in FY24, from Rs 4.99 trillion in FY23.
The numbers have been adjusted for major mergers & acquisitions in the period under review, such as the HDFC-HDFC Bank merger, the Grasim and Aditya Birla Nuvo amalgamation, the Sterlite Industries-Sesa Goa amalgamation, the public sector bank mergers, the ONGC’s acquisition of HPCL, and Power Finance Corporation’s acquisition of REC.
