India’s corporate sector recorded a major milestone in FY25, with profits hitting a 17-year high, according to a new report by Motilal Oswal.
The profit-to-GDP ratio for Nifty-500 companies reached 4.7 per cent, while the overall listed universe reported an even higher figure of 5.1 per cent, the highest in 14 years.
This surge came despite macroeconomic headwinds such as weak consumption, muted government expenditure during the election cycle, and volatile global exports.
The report highlights that corporate profits for Nifty-500 companies grew by 10.5 per cent year-on-year in FY25. This double-digit growth is significant, especially as it comes on top of a strong 30.5 per cent increase in FY24. Over the past five years, India Inc. has delivered a remarkable 30.3 per cent compound annual growth rate (CAGR) in profits, signaling sustained corporate earnings momentum.
Sectoral Contributors
Several key sectors contributed positively to this performance. Telecom, which had been a drag on the profit-to-GDP ratio for the last seven years, turned positive in FY25. PSU Banks added 0.07 percentage points to the ratio, followed by Healthcare and Consumer sectors (0.04% each), Metals (0.03%), and Infrastructure, which made the largest contribution at 0.20%.
However, the report also flagged a few lagging sectors. Oil & Gas saw the steepest decline, reducing its contribution by 0.28%. Other sectors with negative impact included Automobiles (-0.03%), Cement (-0.02%), Utilities (-0.02%), Private Banks (-0.01%), and Retail (-0.01%).
Ownership-based analysis showed private companies within the Nifty-500 group reaching an all-time high profit-to-GDP ratio of 2.8 per cent, up from 2.6 per cent in FY24. Meanwhile, public sector undertakings (PSUs) witnessed a dip, with their ratio falling from 1.8 per cent to 1.6 per cent. Interestingly, multinational corporations (MNCs) operating in India also posted their highest-ever profit-to-GDP ratio of 0.31% in FY25, up from 0.29 per cent the previous year.
The Motilal Oswal report suggests that despite a challenging environment, India Inc. has demonstrated robust financial performance, with key sectors like telecom, infrastructure, and banking driving the turnaround. With profit ratios hitting multi-year highs and strong momentum across ownership segments, India’s corporate earnings cycle appears firmly on track for sustained growth.