MUMBAI: Corporate profits grew 15.3% in FY24, despite sluggish sales growth of around 5.5%, on the back of cost rationalisation, an RBI report said. The services sector outperformed manufacturing in both sales and profit growth, reversing the trend from FY23 when sales grew faster than profits.
Despite sluggish sales, operating expenses rose 3.4% in FY24, mainly due to slower growth in manufacturing costs. Employee remuneration also grew at a slower pace, with the slowdown seen across both manufacturing and services. As a result, operating profits rose 15.3% in FY24, higher than the 4.2% growth in FY23. Cost rationalisation contributed to this profitability boost, RBI said. Operating profit in manufacturing rose 13.2%, while the services sector saw a 15.5% increase.
Sales growth in manufacturing and services declined to 4.1% and 6.8%, respectively, in FY24 from double-digit growth the previous year. Manufacturing sales were dragged down by a contraction in metals, chemicals, pharmaceuticals, and coke and refined petroleum products. In FY23, manufacturing sector profits had declined 3.9%, while services had posted 16.8% growth. Profit after tax increased 16.3% in FY24, with services sector PAT surging 38.1% and manufacturing PAT rising 7.6%. Operating and net profit margins improved across major sectors.
RBI released financial performance data for non-government, non-financial public companies in 2023-24, based on audited accounts of 6,955 firms covering 2021-22 to 2023-24, with the ministry of corporate affairs as the primary source. Manufacturing sector sales grew 4.1%, while the services sector posted a 6.8% increase. A contraction in metals and metal products, along with a decline in chemical and pharmaceutical sales, contributed to the manufacturing slowdown.