Indian Companies Report Strong EBITDA Growth in Q3FY25: SBI
Indian firms showed a robust rebound in the October-December quarter (Q3FY25) after two successive quarters of declining EBITDA growth, as per a report from the State Bank of India (SBI). The report identifies improvement in earnings before interest, tax, depreciation, and amortization (EBITDA), and improved profit margins across sectors.
About 4,000 listed businesses witnessed a top-line growth of 6.2 percent during Q3FY25 over last year's same period. Much more significantly, EBITDA and profit after tax (PAT) have climbed about 11 percent and 12 percent, respectively, indicative of improved working performance. Revenue and PAT without the BFSI segment went up by 5 percent and 9 percent, respectively, as an indicator of widespread revival even outside the finance industry.
One of the important takeaways from the report is the reversal in EBITDA growth. Firms that had witnessed negative EBITDA growth in the last two quarters recorded a 5 percent growth in Q3FY25. At an aggregate level, EBITDA margins grew by 44 basis points (bps) to 14.84 percent from 14.4 percent in the last quarter. Corporate gross value added (GVA), a critical measure of economic productivity, also rose by 300 bps year-on-year to 9.55 percent.
This corporate profit rebound, according to the report, was due to improving consumer morale. The slowing down of household inflation expectations has spurred higher discretionary consumption, fueling demand-led growth in various sectors. In addition, falling consumer confidence, which had been a thorn in past quarters, is now stabilizing. Households are increasingly optimistic regarding global economic trends, the disinflation process, and long-term growth prospects.
This favorable change in sentiment is likely to underpin sustainable economic growth, with enterprises gaining from better conditions of demand. The robust earnings performance during Q3FY25 indicates that Indian businesses are poised for further growth in the subsequent quarters, bolstering optimism in the economic direction of the country.
