Indian Corporations Balance Profit Growth with Cost Management: SBI Report

A report from the State Bank of India reveals that around 4,000 listed companies achieved a 6% revenue growth in FY24, alongside substantial rises in EBIDTA and PAT by 28% and 32% respectively, while employee expenses saw a moderated increase, indicating strategic cost management.

According to a recent report by the State Bank of India, approximately 4,000 listed Indian companies experienced a moderate 6% growth in revenue for the financial year 2024. Notably, these companies saw a significant increase in earnings before interest, taxes, depreciation, and amortization (EBIDTA) and profit after tax (PAT), which rose by 28% and 32% respectively.

The report highlighted a notable moderation in employee expenses, which grew by only 13% in FY24 compared to a 17% increase in FY23. This trend suggests that companies are strategically optimizing their wage bills while maintaining profitability. Over the past four years, these firms have consistently maintained an average EBIDTA margin of 22%, balancing employee costs with other expenditure components.

Through a detailed analysis using the weighted average contribution model, SBI's report indicated that employee expenses, alongside the cost of goods sold (COGS), significantly affect EBIDTA. In FY24, the negative contribution of employee expenses to EBIDTA growth declined to 7% from 8.6% in FY23, demonstrating improved cost management. Even in FY25's second quarter, listed firms reported a 7% EBIDTA growth while managing wage bill increases at a slower pace of 5.6%. Overall, Indian corporations appear to be carefully balancing growth, profits, and cost management strategies.

(With inputs from agencies.)