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India’s Corporate Profit To GDP Ratio – Analysing Growth Across Cycles: Motilal Oswal


BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

India’s corporate profit (listed plus unlisted) to gross domestic product ratio fell to 2.2% from 7.8% over 2008-20. For the Nifty-500 Universe, the ratio has declined to 2.2% from 5.1%, at a two-decade low, over the same period.

Notably, in 2022, the corporate profit to GDP ratio rebounded to a decade high of 4.3% and 4.5% for the Nifty-500 Universe and listed India Inc. respectively. The recovery was driven by the expansion in the economy, as the denominator i.e. GDP grew 19.5% YoY in FY22 after a contraction in 2021 (due to Covid-19 induced lockdowns), while corporate profit rose at a faster rate of 48% YoY (for the Nifty-500 Universe).

The growth in profit, however, was hardly broad-based and driven only by three sectors: banking, financial services and insurance, oil and gas, and metals. More than half of the incremental growth was steered by BFSI, underpinned by a modest revival in credit growth and improvement in asset quality trends.

In this report, we analyse ‘corporate earnings as a percentage of GDP’ in greater detail.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.





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