One-third Of India Inc’s Profit Surge by Prudent Cost Management: SBI Report

New Delhi, Dec 16 (KNN) A comprehensive report by the State Bank of India (SBI) reveals that approximately 4,000 listed companies demonstrated modest yet strategic financial performance during the fiscal year 2024. 

While revenue growth registered at a moderate 6 per cent, the companies exhibited significantly stronger profitability metrics, with earnings before interest, taxes, depreciation, and amortisation (EBIDTA) and profit after tax (PAT) surging by 28 per cent and 32 per cent, respectively, as reported by the State Bank of India(SBI).

The report highlighted a notable trend of prudent cost management, particularly in employee expenses. Wage costs increased by just 13 percent in fiscal year 2024, a marked decline from the 17 per cent recorded in the previous fiscal year. 

This indicates a deliberate corporate strategy of optimizing workforce expenditures while maintaining robust financial performance.

Over the past four years, Indian companies have consistently maintained an impressive average EBIDTA margin of 22 per cent, concurrent with an average annual wage bill growth of approximately 12 per cent. 

This demonstrates a calculated approach to financial management, ensuring a sustainable margin of safety in an increasingly competitive economic landscape.

A detailed expenditure analysis using the weighted average contribution model revealed that employee expenses significantly impact EBIDTA growth. 

The weighted average negative contribution of employee expenses to EBIDTA declined from 8.6 per cent in fiscal year 2023 to 7 per cent in fiscal year 2024, signalling improved operational efficiency and cost control mechanisms.

The trend of measured growth continued into the second quarter of fiscal year 2025, with listed companies reporting a 7 per cent EBIDTA growth while simultaneously maintaining a restrained wage bill expansion of 5.6 per cent. This pattern underscores a strategic corporate approach of balancing revenue generation with disciplined cost management.

The SBI report ultimately portrays a picture of Indian corporations navigating a complex economic environment with financial acumen. 

By carefully modulating expenses while sustaining profitability, these companies are positioning themselves for resilient and sustainable growth in an increasingly dynamic market landscape.

(KNN Bureau)