INSUBCONTINENT EXCLUSIVE:
The soft patch in earnings over the last decade has resulted in steady deterioration in the corporate profit-to-GDP ratio
cent in FY08 , according to a study by Motilal Oswal Financial Services.
For all companies including those of unlisted companies, corporate
profit to GDP ratio declined from 7.8 per cent to 3 per cent between FY08 and FY18
The ratio has consistently declined since 2010 and is also below the long-period average of 3.9 per cent (2003-2018), the study
said.
Profits of companies on the Nifty-500 have remained stagnant at Rs 4-4.8 trillion over the last five years, even as nominal GDP has
continued to grow steadily, according to Motilal Oswal study.
The study shows the corporate profit to GDP ratio doubled from 2.8 per cent to
5.5 per cent over 2003-08, with Nifty-500 profits growing at a substantial 31 per cent, 2 times the pace of underlying GDP growth driven by
the export-, investment- and capexoriented sectors.
Between 2003 and 2008, the global economy grew at a faster clip, helping the
Capacity investment across sectors was also significant as investment cycle took off.
However, the contribution in the profit to GDP is
research, Motilal Oswal Financial Servies
