Profit at country's top-10 biz groups grows at 30.6% CAGR to Rs 2.57 trn

Six of the top-10 groups by revenue reported 35%-plus CAGR in combined profits the past three years; gains were led by groups with big play in industrial metals

The past three years have been among the best for India's top business groups in terms of margins and profits. Six of the country's top ten business groups by revenue reported 35 per cent-plus annualised growth in their group profits during these years. The top gainers were groups with a big play in industrial metals such as steel and non-ferrous metals.

The country's ten biggest business groups reported a combined net profit of Rs 2.57 trillion in FY22, having grown at a CAGR of 30.6 per cent from 1.16 trillion at the end of FY19. Tatas topped the earnings league table with group profits of Rs 74,540 crore in FY22, followed by Reliance Industries (Rs 60,776 crore) and JSW Group (Rs 22,547 crore).

In comparison, the combined net profit of all listed companies grew at CAGR of 18.3 per cent since FY19. The firms in the BS sample reported a combined net profit of Rs 7.32 trillion in FY22, up from Rs 4.52 trillion in FY21 and Rs 4.42 trillion in FY19. The analysis is based on a common sample of 956 non-financial companies that are part of BSE500, BSE Mid-Cap and BSE Small-cap index.

Iron & steel major JSW Group posted the biggest jump in earnings, at 66.5 per cent compounded annual growth (CAGR) in group net profits during the past three-years. The group companies reported combined net profit of Rs 22,547 crore in FY22, up from just Rs 4,882 crore in FY19

It was followed by Tata group, whose earnings grear at 58.4 per cent CAGR the past three years. Companies in this fold reported a combined net profit of Rs 74,540 crore last fiscal, up sharply from Rs 18,754 crore three years ago. Tata is followed by the Bharti Group, whose combined net profit grew at a CAGR of 54.1 per cent the past three years, thanks to a sharp recovery in the earnings of Bharti Airtel.

Other top business groups with faster growth in the earnings in the last three yeatrs include Adani Group (44.9 per cent CAGR growth in group profits), AV Birla group (41.3 per cent CAGR) and Vedanta (35.2 per cent). The AV Birla group numbers exclude Vodafone Idea, the group telecom joint venture with UK's Vodafone Plc.

In contrast, Mukesh Ambani's Reliance Industries, Rahul Bajaj Group, Mahindras' and Larsen & Toubro group were laggard with a lower than average growth in net profits in the last three years. (See the adjoining charts).

The last financial year ended on a high note for corporate India with 31 per cent year-on-year growth in net sales and 62 per cent in net profit over the previous year. These were the best figures for Corporate India in at least a decade. However, despite a bjg jump in profits in the last three years, India's top listed companies continue to struggle with a sluggish growth in revenues and capital expenditure.

The combined revenues of the top listed companies grew at a sluggish pace of 7.4 per cent per annum since FY19, growing at a slower pace than the underlying growth in the country's overall economic growth during the period. India's Gross Domestic Product (GDP) at current price grew at compounded annual growth (CAGR) of 7.8 per cent since FY19.

The companies in the Business Standard sample reported combined net sales of Rs 88.69 trillion in FY22 up from Rs 67.7 trillion in FY21 and Rs 71.68 trillion in FY19.

A slower recovery in revenues from the Covid-19 related slump in FY20 and FY21 translated in an equally slow growth in the same period, their fixed assets have grown at a CAGR of only 6.8 per cent indicating a lack of serious capex by big companies.