4,000 Indian companies report strong EBITDA in Q3FY25

Indian companies saw a strong rebound in Q3FY25 after two consecutive quarters of negative EBITDA growth, according to a State Bank of India (SBI) report. Around 4,000 listed companies recorded a 6.2% revenue growth, with EBITDA and profit after tax (PAT) rising by 11% and 12%, respectively.

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Indian companies demonstrated a strong rebound in the October-December quarter (Q3FY25) following two consecutive quarters of negative EBITDA growth, according to a comprehensive report by the State Bank of India (SBI). The report signals a positive shift in corporate earnings, suggesting that businesses are regaining stability and strengthening their operational foundations amid evolving market dynamics.

The analysis highlights a significant improvement in earnings before interest, tax, depreciation, and amortization (EBITDA), with better margins recorded across diverse industries. It stated, “Around 4000 Corporate in listed space reported revenue growth of 6.2 per cent while EBIDTA and profit after tax (PAT) grew by around 11 per cent and 12 per cent respectively in Q3FY25 as compared to Q3FY24.” This data reflects not only stronger operational efficiency but also the resilience of India’s corporate sector amid economic headwinds. Approximately 4,000 listed companies reported a 6.2% year-on-year increase in revenue, while EBITDA and profit after tax (PAT) recorded healthy growth of 11% and 12%, respectively, underscoring improved cost management and higher profitability.

The recovery extends beyond the core financial sector. When excluding the banking, financial services, and insurance (BFSI) sector, companies still witnessed a 5% revenue increase and a 9% rise in PAT. This indicates a broad-based recovery, suggesting that non-financial sectors have also adapted effectively to market challenges and are contributing significantly to the overall growth narrative. Such resilience highlights the diversified strength of India’s corporate ecosystem, which remains pivotal for sustained economic momentum.

One of the standout findings of the report is the reversal in EBITDA growth, a critical indicator of a company’s operational health. After two consecutive quarters of negative growth, the same set of companies posted a 5% increase in EBITDA in Q3FY25, marking a crucial turnaround. On an aggregate level, EBITDA margins improved by 44 basis points (bps), rising from 14.4% in the previous quarter to 14.84% in Q3FY25. This uptick suggests that businesses are becoming more efficient in managing costs while also benefiting from improved market demand.

Another important indicator, corporate gross value added (GVA)—a key measure of economic productivity—registered a substantial improvement, increasing by 300 bps year-on-year to 9.55%. This rise not only reflects better profitability but also indicates a stronger contribution from the corporate sector to the broader economy. Enhanced GVA growth signals that companies are adding more value through their operations, a positive sign for India’s long-term economic trajectory.

Drivers of recovery in corporate earnings 

• Improved Consumer Sentiment: The recovery in corporate earnings is driven by stronger consumer sentiment, reflecting increased confidence in the economy.
• Decline in Inflation Expectations: A notable drop in household inflation expectations has encouraged higher discretionary spending, leading to demand-driven growth across industries.
• Boost in Non-Essential Purchases: With easing inflationary pressures, consumers are more willing to spend on non-essential goods, directly benefiting sectors like retail, FMCG, and consumer durables.
• Stabilizing Consumer Confidence: After periods of global uncertainties and domestic inflation concerns, consumer confidence is stabilizing, with households showing optimism about global trends and India’s long-term growth prospects.
• Stronger Demand Outlook: This renewed consumer confidence is not only supporting current demand but also creating a stable foundation for future economic expansion, benefiting corporate growth in the long run.

Looking ahead, these encouraging indicators suggest that Indian companies are well-positioned for sustained growth in the coming quarters. The combination of rebounding EBITDA, stronger profit margins, improving consumer sentiment, and rising corporate GVA points toward a more favorable and stable business environment. As inflation stabilizes and consumer confidence strengthens, businesses are likely to experience consistent demand, creating opportunities for further investment and expansion.

Overall, the SBI report paints an optimistic picture of India’s corporate landscape, signaling that companies have not only weathered recent challenges but are now entering a phase of renewed growth and stability. This upward trend bodes well for the broader economy, potentially supporting stronger GDP growth and increased investor confidence in the months ahead.