The Indian corporate sector demonstrated resilience in FY24, with listed companies reporting steady revenue growth alongside significant profitability, as per a report by the State Bank of India (SBI). The findings reveal that while gross sales increased modestly, businesses optimized costs effectively, driving higher margins and profits.
Strong profit growth amid moderate revenue
According to the SBI report, approximately 4,000 listed Indian companies achieved a 6% growth in revenue during FY24. However, the real highlight was the impressive surge in earnings before interest, taxes, depreciation, and amortization (EBIDTA), which grew by 28%, and profit after tax (PAT), which rose by 32%.
This robust profit growth underscores improved operational efficiencies and strategic cost management, positioning Indian companies favorably in the global market.
Wage growth slows but remains steady
One key takeaway from the report is the moderation in employee expenses. Wage growth slowed to 13% in FY24 compared to 17% in FY23. Over the past four years, the average annual growth in wage bills has hovered around 12%, reflecting a balanced approach to managing employee costs without compromising on talent retention or productivity.
“Around 4,000 listed entities reported a 6% growth in the top line in FY24, while EBIDTA and PAT grew by 28% and 32%, respectively. However, employee expenses grew by only 13% in FY24 as compared to 17% in FY23,” the report stated.
Consistent margins through effective cost management
The SBI report highlighted that Indian companies have maintained an average EBIDTA margin of 22% over the last four years. The weighted average negative contribution of employee expenses to EBIDTA growth also declined to 7% in FY24, down from 8.6% in FY23, reflecting enhanced cost efficiencies.
Further, during Q2 FY25, listed companies reported a 7% growth in EBIDTA, with wage bills rising by a modest 5.6%. These metrics underscore the strategic measures Indian corporations are taking to balance revenue growth, profitability, and cost control.
Optimizing for sustained growth
The moderation in wage growth, coupled with consistent profit margins, highlights the evolving maturity of Indian businesses in navigating volatile economic conditions. By focusing on cost optimization and leveraging operational efficiencies, Indian companies are ensuring sustainable growth and maintaining their competitive edge globally.
