In fiscal year 2016-17 alone, the BSE rose from 25,269.64 on April 1, 2016, to 29,620.50 on March 31, 2017, posting a rise of 4,350.86 points in a year. While the Nifty 500 rose by 1,051 points in the same year. Though Indian companies faced the heat of policy interventions like demonetisation and GST (read: How demo hurt companies ) on both the NSE and BSE, they managed to exceed expectations. Below is the list of most profitable companies based on their net profit, return on capital employed and profit after tax margin.
Top 10 most profitable companies based on net profit.
The top three most profitable companies are government-owned entities dealing with fossil fuels earning a total of Rs 51,506.91 crore in FY17. Five out of the 10 most-profitable companies based on net profit are government-owned companies, putting Rs 68,931.47 crore in the Indian government's kitty. In the private sector, Vedanta leads the list with Rs 11,068.70 crore earning, followed by ITC Ltd (Rs 10,200.90 crore) and ICICI Bank (Rs 9,801.09 crore). The reason that the government-owned companies have made it to the top is because of their huge market share and lack of competition from private companies in the energy sector.
Top 10 most profitable companies based on return on capital employedROCE (return on capital employed) is a measure of financial efficiency since it factors the amount of capital used to generate profit. High ROCE also indicates that the company can re-invest bigger chunk of its profit to increase per share earnings for the shareholders, which signals its positive future growth.
On the basis of ROCE, ITI Ltd, a public sector undertaking, managed to bag a whopping return on 1,222.62 per cent over its capital employed over FY 17, which is 6.75 times Dish TV, which features second on the list with 180.92% returns over capital employed. In the top 10 list, only two government companies appear along with eight private companies.Top 10 most profitable companies based on profit after tax margins
Profit after tax margin (PATM) represents the percentage of revenue left after expenses have been subtracted from sales. It showcases the amount of profit that a company can take out from its total sales. A higher net profit margin leads to higher profitability, indicating share price growth.
Coal India Ltd had the highest profit after tax margin of 3,451.11 per cent in FY17, which is 24.65 times higher than Centrum Capital, which stood second on the list. A major reason for Coal India's high PATM is its monopoly over the coal mining sector in India. Coal India Ltd has been featured in all three top 10 lists based on net profit, return on capital employed, and profit after tax margin, an incredible achievement for a government-owned company.