A snapshot of Mumbai's skyline
New Delhi: The Reserve Bank of India (RBI) recently released data on the performance of private non-financial companies in 2024-25, showing a significant improvement in sales growth compared to the previous year. The major highlights of the report are as follows:
The performance of private non-financial companies sales
Sales of listed private non-financial companies increased by 7.2 percent in 2024-25, up from 4.7 percent the year before.
Despite facing global headwinds, the sales growth of IT companies also saw a notable improvement, rising to 7.1 percent during the fiscal year 2024-25 from 5.5 percent in the previous year.
Non-IT services companies, on the other hand, recorded double-digit sales growth during the year. This growth was driven by the strong performance of industries such as telecommunication, transport and storage services, and wholesale and retail trade.
The RBI reported a 6.0 percent growth in sales for manufacturing sector companies in 2024-25, up from 3.5 percent the previous year. The growth was led by the automobile, electrical machinery, food and beverages, and pharmaceutical industries.
However, the petroleum and iron and steel industries saw a decline in sales during the same period.
Expenditure
The report shows a 6.6 percent increase in raw material expenses for manufacturing companies in 2024-25, with the raw material-to-sales ratio increasing from 54.2 percent during the previous year to 55.7 percent in FY25, thus, indicating mounting input cost pressure.
Staff costs also increased across sectors, with manufacturing seeing a 10.0 percent rise, IT seeing a 4.4 percent rise, and non-IT services companies seeing a 12.0 percent rise during the same period.
Operating profit
The operating profit growth of manufacturing companies decreased to 6.0 percent in 2024-25 from 12.4 percent the previous year due to an increase in input costs.
In the services sector, profit growth for non-IT services companies moderated to 15.9 percent while it slightly increased to 6.1 percent for IT companies during the same period.
“During 2024-25, operating profit margin moderated by 20 basis points (bps), 80 bps and 30 bps to 14.2 percent, 21.9 percent and 22.1 percent respectively, for manufacturing, IT and non-IT services companies,” says the RBI report.
Interest coverage ratio
The interest coverage ratio (i.e.Gross Profits/Earnings before Interest and Tax (EBIT)/Interest Payment) improved in major sectors in 2024-25 compared to the previous year, with the ratio remaining above unity for most industries during this period.
Conclusion
Overall, the data released by the Reserve Bank of India paints a positive picture of the private corporate sector’s performance in 2024-25, with sales growth showing a healthy increase across various industries.
Given the present global and economic scenario, how this sector will unfold remains to be seen.
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