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Informist, Monday, Oct. 20, 2025

 

NEW DELHI – Having recovered from the COVID-19 onslaught, India's corporate sector has a robust financial foundation which makes it well placed to capitalise on future opportunities and contribute to the sustained economic expansion, according to a study titled "Resilience and Revival: India's Private Corporate Sector" by the Reserve Bank of India's staff published in its monthly bulletin for October, released Monday. Comments in the article do not represent the views of the central bank.

 

"Despite pandemic-related stress, large firms sustained high profitability while medium and small firms enhanced their debt servicing," the study said. The authors noted the sales growth of non-government non-financial companies peaked at 32.5% in 2021-22, before normalising at a more stable rate of just over 7% in 2024-25. 

 

"Operating profit margins remained resilient, with large firms consistently outperforming medium and small enterprises. Despite challenges, cost optimisation strategies helped businesses sustain profitability," the study said. Large corporations drove overall profitability after the pandemic. Bottom line of corporations increased to INR 7.1 trillion in 2024-25 from INR 2.5 trillion in 2021-21.

"While net profit margin of IT sector moderated during post-COVID period due to slowdown in activities coupled with higher salary outgo, net profit margin of non-IT service sector remained into negative zone since COVID before returning into positive territory in 2023-24," the study said. Companies were able to improve their operating profit margins by cutting costs and enhancing operational efficiency during the pandemic.

 

The manufacturing sector led the recovery as net profit margins of these companies hit double-digit levels in the previous financial year. Within the manufacturing sector, the petroleum and automobile industries bounced back strongly. However, while these two industries reported a strong sales growth, their profit margin lagged other industries within the manufacturing sector. In contrast, the pharmaceutical industry was able to achieve higher profit margin despite lower sales growth, the paper said.  

 

"Industry-wise profitability analysis reveals that while some industries were able to achieve higher sales growth along with higher profitability, other industries were able to maintain the sales growth by taking a hit on their profit margins," the paper said. 

 

An analysis by the authors suggested that Indian corporates continued to deleverage their balance sheet, which is expected to help them undertake fresh investment activities. This trend of deleveraging was largely seen in manufacturing and information technology companies. Non-information technology services sector companies saw higher leverage, which continued climbing till 2022-23, on a lower equity base on the back of a fall in their retained earnings. This particular trend was seen most in telecom companies and transport sector companies. Capitalisation of higher profit during 2023-24 and 2024-25 helped the sector arrest the rising leverage trend, the paper said.

 

"Looking ahead, sustaining corporate growth will largely depend on a combination of factors such as macroeconomic conditions, domestic demand, supportive policy measures, and global market dynamics," the paper said. Strengthening supply chains, improving cost efficiencies, and working on technological innovations can play an important role in maintaining the competitiveness among Indian corporates and shaping their overall performance, the authors said.  End

 

Reported by Anand JC

Edited by Subhojit Sarkar

 

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