20 firms accounted for 65% corporate profit in first half of FY22: Study

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There has been a greater profit concentration in the past few years as a big pie of corporate profit has gone to large private companies while profitability of public sector firms and small entities was poor, according to a report in the Business Standard.

In the first half of 2021-22, 65% of all corporate profit in the listed space went to 20 most profitable companies compared to 62.4% in FY21 and 52% way back in FY12, according to the report. The highest profit concentration was 72% recorded in FY20 .

The combined net profit of 20 most profitable listed firms was Rs 2.49 trillion in the first half of FY22, a steep 78% higher than about Rs 1.4 trillion in the first half of FY21.

The combined net profit of all 815 companies the Business Standard analysed in its sample stood at Rs 3.93 trillion, 84% higher Rs 2.14 trillion in the first half of FY21.

According to the report, Reliance Industries (RIL) was the most profitable company in the first half of FY22 with a net profit of around Rs 26,000 crore (adjusted for exceptional gains and losses).

RIL topples ONGC

Oil & Natural Gas Corporation at Rs 24,000 crore and State Bank of India at Rs 21,700 crore, the next most profitable company. Three public sector companies feature among the 10 most profitable companies in the first half of FY22.

RIL toppled ONGC, to become the most profitable company in FY14. The state-owned firm had enjoyed this status between FY05 and FY13.

The greater profit concentration is also reflected in concentration in corporate or promoter capital as captured by the company’s net worth or equity.

The report quoting analysts said that a company’s net worth is a key determining factor of investment capacity. This would mean large companies in the private sector may not only grow faster than smaller firms but also result translate in higher profit concentration in future.