India Inc ended FY25 on a strong note, with corporate profits growing at a pace three times faster than GDP, according to Ionic Wealth’s latest “India Inc FY25: Decoding Earnings Trends & Path Ahead” chartbook. The research report attributes this earnings momentum to easing inflation, robust domestic demand, lower debt costs, and operating efficiencies across mid and smallcap segments. Ionic Wealth expects the growth trend to sustain into FY26, with capital expenditure plans accelerating across sectors and margins set to improve further.
India Inc’s Profit Boom Outpaces GDP by 3x
Ionic Wealth said that India Inc’s post-COVID earnings momentum continues to impress, with profits (led by mid and small caps) surging at a compound annual growth rate (CAGR) of 30.3 percent during FY20–25, compared to just 10.5 percent for GDP. Corporate profits as a share of GDP have risen from 1.9 percent in FY20 to 6.9 percent in FY25, though still well below the US benchmark of 16 percent, signaling further upside potential.
As per Ionic Wealth, Nifty 500 companies posted revenue growth of 6.8 percent, EBITDA growth of 10.4 percent, and PAT growth of 5.6 percent YoY in FY25. However, midcap and smallcap indices significantly outperformed largecaps. While largecaps posted just 3 percent PAT growth, midcaps delivered 22 percent and smallcaps came in at 17 percent. Ionic Wealth noted that margin expansion and better operating leverage aided the broader earnings resilience.
The report pointed out that midcap and smallcap firms continue to deliver faster PAT growth than their largecap counterparts. This trend is particularly strong in sectors like Consumer Durables, Chemicals, Logistics, Healthcare, and Utilities. Ionic Wealth said this momentum could persist as smaller firms gain scale and efficiency.
Shift in Profit Mix: BFSI Dominates
The post-COVID period has brought a shift in India’s profit pool. Ionic Wealth observed that BFSI’s contribution to Nifty 500 profits nearly doubled—from 20.2 percent in FY20 to 38.8 percent in FY25—while Technology, Oil & Gas, and Chemicals & Pharma saw their profit share shrink. Meanwhile, Automobiles and Capital Goods made modest gains in contribution.
Ionic Wealth emphasized that stock market returns in FY21, FY22, and FY24 were strongly correlated with EBITDA and PAT growth, not revenue momentum. FY23 and FY25, which witnessed subdued profit growth, also saw muted market performance, reinforcing that “profits move the market.”
Key Sectors Powering FY25 Gains
Private banks, NBFCs, Capital Goods, Consumer Durables, and Healthcare stood out with double-digit revenue and EBITDA growth, according to Ionic Wealth. Consumer Durables topped the list with a 45 percent rise in revenue and a 51 percent rise in EBITDA. Healthcare followed closely, while capital goods saw EBITDA grow 21 percent YoY.
EBITDA margins across the Nifty 500 (ex-BFSI) improved to a four-quarter high of 16.8 percent in March 2025 from 15.9 percent in March 2024, aided by cooling inflation and better operating leverage. Ionic Wealth said sectors such as Cement, Capital Goods, Chemicals, and Metals saw visible improvement in margins.
Capex Cycle Reignites with Strong Balance Sheets
A notable trend highlighted by Ionic Wealth is the revival of private capex. Companies now hold a record ₹10.67 lakh crore in cash balances and are planning to double capital expenditure to ₹72.25 lakh crore over FY26–30. Nearly 80 percent of this planned spend is geared toward income generation and upgradation, with about 29 percent allocated to value addition and new growth opportunities.
Ionic Wealth flagged that companies across sectors such as Oil & Gas, Power, Telecom, Textiles, and Construction undertook significant capex during FY23–25 without raising new debt. This self-funded capex signals healthier balance sheets and disciplined growth strategies, a theme the brokerage sees continuing in FY26.
Sectoral Outlook for FY26
Ionic Wealth provided an extensive FY26 sectoral preview:
Banking: Credit growth to remain subdued due to high CD ratios and unsecured loan stress. Margin pressure should ease in 2HFY26 as interest rates drop and loan demand revives.
IT: BFSI demand to support revenues, but discretionary spending remains weak. Deal wins could drive better exits in 2HFY26.
Pharma: Chronic care, CDMO enquiries, and hospital expansion will lead growth; US generics face margin pressure.
Auto: Single-digit volume guidance and rising raw material costs are likely to cap earnings upside.
FMCG: Rural recovery, tax breaks, and softer agri inflation are expected to boost volumes and margins.
Metals: Ferrous players benefit from lower coal costs but face pricing risks; margin sustainability hinges on export recovery.
Chemicals: Domestic demand remains strong but global oversupply and Chinese dumping could pressure margins.
Capital Goods: Order books are swelling across renewables, defence, and data centres, backed by strong public capex.
Cement: FY26 could see aggressive capacity expansion by top producers.
EMS & Durables: Robust revenue growth expected, aided by global tie-ups, new projects, and R&D.
Real Estate: FY25 launch delays will push bookings into FY26; faster approvals and active land acquisition to drive growth.
Energy: Demand-surge and thermal project rollouts to boost earnings; firms are also shifting toward green hydrogen and energy storage.
Ionic Wealth concluded that India Inc entered FY26 on solid footing, driven by strong profit growth, margin expansion, self-funded capex, and rising earnings contribution from midcaps and smallcaps. Despite global volatility, resilient demand and robust balance sheets support India’s equity markets. Strategic capital allocation, improving profitability, and expanding margins across key sectors are likely to drive market performance into FY26 and beyond.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
