Thanks to a sharp run-up in the profits of oil marketing companies and the banking sector, the corporate profit-to-GDP ratio has hit a 15-year high in the financial year March 2024.

The corporate profit-to-GDP ratio of the Nifty-500 universe and listed India Inc swelled to 4.8 per cent and 5.2 per cent, respectively.

The improvement in profit was led by the BFSI (banking, financial services and insurance), oil and gas, and automobile sectors, which contributed 95 per cent of the total improvement, according to a Motilal Oswal Financial Services report.

In contrast, sectors such as metals, technology and chemicals contributed adversely. The NSE-500 index accounts for 91 per cent to market cap.

The 0.8 per cent improvement in Nifty-500 companies’ profit-to-GDP ratio last fiscal was propelled by the BFSI, oil and gas, and automobile sectors.

The corporate profit for the Nifty-500 universe grew faster at 30 per cent year-on-year in FY24, after moderating to 9 per cent in FY23.

The nominal GDP grew 9.6 per cent year-on-year against 30 per cent by Nifty-500 companies in FY24.

In FY23, GDP grew by 14.2 per cent against 18.9 per cent in FY22.

Interestingly, the 53 companies in the BSE PSU index have registered 48 per cent increase in net profit last fiscal at ₹5.07 lakh crore, against ₹3.43 lakh crore in FY23.

“We expect the ratio to sustain going forward, as India remains in a very good shape with excellent macros, inflation below 5 per cent, both current account and fiscal deficits well within tolerance band, a stable currency and healthy corporate earnings,” said the Motilal Oswal report.