Mumbai, July 3: India Inc has shown remarkable financial strength over the last five years, with corporate profits growing nearly three times faster than the country's GDP between FY20 and FY25, a new report said on Thursday.

The profit-to-GDP ratio has risen significantly to 6.9 per cent -- reflecting strong earnings performance despite economic challenges, according to the data compiled by Ionic Wealth (Angel One). The report, titled ‘India Inc. FY25: Decoding Earnings Trends & Path Ahead’, highlights that FY25 was a resilient year for Indian companies. Revenue of Nifty 500 firms grew by 6.8 per cent year-on-year (YoY), while EBITDA rose by 10.4 per cent and profit after tax (PAT) increased by 5.6 per cent.

Notably, mid-cap and small-cap companies outshined large-cap firms in terms of profit growth, recording 22 per cent and 17 per cent PAT growth respectively, compared to just 3 per cent for large caps. Sector-wise, BFSI (banking, financial services and insurance) emerged as a major driver of profitability, with its share of total profits nearly doubling since the pandemic. Auto, capital goods, and consumer durables also posted healthy earnings growth.

Consumer durables led with a massive 57 per cent PAT growth in FY25, followed by healthcare at 36 per cent and capital goods at 26 per cent, as per the report. Companies also benefited from margin improvements in sectors such as cement, chemicals, metals, and auto, helped by easing inflation and better input cost management.

The report also points to a significant jump in capital expenditure plans. India Inc. aims to nearly double its capex to Rs 72.25 lakh crore during FY26–30, with a majority of the investment expected to be self-funded. Around 80 per cent of this capex is focused on upgrading existing operations and generating new income, with sectors like power, green energy, telecom, auto, and cement leading the next wave of investments. Looking ahead to FY26, the outlook varies by sector.

Banks and NBFCs may see loan growth stabilise as interest rates are expected to ease in the second half of the year. The IT sector is likely to witness a recovery, driven by cost-optimisation deals and demand from BFSI clients. Pharma growth will be supported by expansion in chronic therapies and hospital networks, while the FMCG sector is expected to benefit from improving rural demand and a good monsoon, the report said.

(IANS)

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