High Net Profit Margin Companies In India: When companies report their annual earnings, they highlight a few factors above others – Revenues, sales growth, and net profits. Of all those factors, we will pick the best stocks based on one crucial filter – Net Profit Margin. A company’s revenues and net profits are only as good as its margins and cost-effectiveness. This includes all the expenses it incurs to provide services and products to its customers.
A high net profit margin allows the company to take advantage of more retained earnings as compared to a much larger company with lower margins. Here are some of the high net profit margin companies in India.
High Net Profit Margin Companies in India
Here are the top 5 listed companies with one of the high net profit margins among any company in the Indian market:
High Net Profit Margin Companies #1 – Indian Energy Exchange
IEX is the primary market for energy trading. The company provides a platform for the physical delivery of electricity, renewables, and more. The company has well over 7,300 participants located in every Indian state and 5 union territories. As their business is dependent on connecting buyers and sellers, it is absolutely essential for the company to have a countrywide reach. IEX is licensed by the Central Electricity Regulatory Commission (CERC) for the trading of electricity, renewal energy certificates, and energy-saving certificates.
Financials Of Indian Energy Exchange
| CMP | ₹ 155 | Market Cap (Cr.) | ₹ 13,821 |
| EPS | ₹ 3.23 | Stock P/E | 47.6 |
| ROCE | 51.8 % | ROE | 39.4 % |
| Face Value | ₹ 1.00 | Book Value | ₹ 8.37 |
| Promoter Holding | 0 | Price to Book Value | 18.5 |
| D/E Ratio | 0.02 | Dividend Yield | 1.30 % |
| Net Profit Margin | 69.0 % | Operating Profit Margin | 83.4 % |
IEX is a small-cap energy trading company. The company earned ₹401 crores in revenue in FY 23, down from ₹426 crores in FY 22. Its operating profit margin for the year was 84 percent, down from 86 percent last year. The company’s slightly fallen in sales, margins, and net profits over the years.
For the latest financial year (FY 23), IEX attained a net profit margin of 73 percent. The stock P/E of 47.6 is twice that of its industry P/E of 24.5, indicating that the stock is quite overpriced at its current levels. The company has a very low D/E ratio, showing very low levels of debt in the company’s books.
Its return ratios are significantly high at 51.8 percent (ROCE) and 39.4 percent (ROE). IEX has given a multi-bagger return of 188 percent in the past 5 years, almost increasing shareholder value by double.
High Net Profit Margin Companies #2 – HDFC AMC
Part of the banking giant HDFC Group, HDFC AMC is the investing and mutual fund division of the conglomerate. The company started as a joint venture in 2001 with Abrdn Investment Management, after registering with SEBI in 2000. Over the years it has acquired other funds such as Zurich Mutual Fund and Morgan Stanley Mutual Fund. The AMC has ₹4.4 trillion rupees in assets under management (As Of Mar 31, 2023).
Financials Of HDFC AMC
| CMP | ₹ 1,854 | Market Cap (Cr.) | ₹ 39,566 |
| EPS | ₹ 66.7 | Stock P/E | 27.8 |
| ROCE | 32.3 % | ROE | 24.5 % |
| Face Value | ₹ 5.00 | Book Value | ₹ 286 |
| Promoter Holding | 62.8 % | Price to Book Value | 6.45 |
| D/E Ratio | 0 | Dividend Yield | 2.28 % |
| Net Profit Margin | 65.7 % | Operating Profit Margin | 74.7 % |
HDFC AMC is a mid-cap asset management company, sized at a market capitalization of ₹39,566 crores. For the year ending March 2023, the company earned ₹2,167 crores in revenues, down from ₹2,429 crores in FY 22. The company has a very high operating profit margin of 75 percent and a net profit margin of 65.7 percent (FY 23).
Despite stagnating revenues, the company has maintained its margins over the years. It has a moderately high ROE (24.5) and ROCE (32.3). A contributing factor to HDFC AMC’s high margins is its lack of debt. The company has a very low D/E ratio of zero, leaving more funds available for profits and reserves.
The stock P/E of 27.8 is slightly higher than its industry P/E of 23.9. The promoters of HDFC AMC own a combined stake of 62.7 percent, down from 68.8 percent in June 2022. Since listing in August 2018, HDFC AMC has given a low return of 5.8 percent.
High Net Profit Margin Companies #3 – Nippon Life India Asset Management
Nippon Life India is an asset management company, involved in investing services and products such as mutual funds, ETFs, retirement funds, and more. It is one of the largest mutual funds in India, with an AUM of ₹2,93,159 crores as of March 2023. The company registered with SEBI in June 1995, making it one of the first mutual funds in India, back when it was known as Reliance Mutual Fund. Only recently in September 2019, the company renamed itself to Nippon India Mutual Fund.
Financials Of Life India Asset Management
| CMP | ₹ 237 | Market Cap (Cr.) | ₹ 14,772 |
| EPS | ₹ 11.6 | Stock P/E | 20.4 |
| ROCE | 26.6 % | ROE | 20.7 % |
| Face Value | ₹ 10.0 | Book Value | ₹ 56.4 |
| Promoter Holding | 73.7 % | Price to Book Value | 4.18 |
| D/E Ratio | 0 | Dividend Yield | 4.86 % |
| Net Profit Margin | 53.6 % | Operating Profit Margin | 58.9 % |
Nippon Life is a small-cap asset management company with a market capitalization of ₹14,772 crores. For the financial year 2022-23, Nippon Life earned revenues of ₹1,350 crores and an operating profit of ₹795 crores, translating to an OPM of 59 percent. The revenues of the company have fallen in the past few years, but profits have increased significantly for the AMC.
In FY 23, they made ₹723 crores in net profits, vs 744 crores in FY 22 and 680 crores in FY 21. The company is debt free and has a good ROCE and ROE of 26.6 and 20.7 percent respectively. Nippon Life India’s stock P/E of 20.4 is below that of its industry (23.9).
The promoters of Nippon, the Nippon Life Insurance Company, own a majority stake of 73.6 percent in the company. The promoter holding has decreased slightly in the past 2-3 years from 75.9 percent to its current stake. Amidst volatility and steady sales, the company has given a slightly negative return of -0.6 percent in the past 5 years.
High Net Profit Margin Companies #4 – CDSL
CDSL is one of two major depository institutions in the Indian stock market. Of the two, only CDSL is publicly traded on the markets. The company provides various investor services related to major corporate actions like dividends, bonus shares, splits, and so on. The depository was founded in 1999 and its services are availed by exchanges, clearing corporations, investors, issuers, and depository participants.
Financials Of CDSL
| CMP | ₹ 994 | Market Cap (Cr.) | ₹ 10,385 |
| EPS | ₹ 26.4 | Stock P/E | 37.6 |
| ROCE | 31.6 % | ROE | 23.9 % |
| Face Value | ₹ 10.0 | Book Value | ₹ 116 |
| Promoter Holding | 20.0 % | Price to Book Value | 8.53 |
| D/E Ratio | 0 | Dividend Yield | 1.51 % |
| Net Profit Margin | 49.7 % | Operating Profit Margin | 57.4 % |
CDSL earned ₹555 crores in FY 23, and ₹319 crores in operating profits, translating to an OPM of 57 percent. With a net profit margin of 49.7 percent, the company reported a net profit of ₹276 crores.
The company’s revenues have increased significantly over the past 5 years. In FY 19, the company reported revenues of ₹196 crores and a net profit of ₹115 crores. It has strong return ratios, showing efficient use of capital.
The ROE and ROCE of CDSL were at 23.9 percent and 31.6 percent respectively. The company is debt free, with a D/E ratio of zero. CDSL is one of the best-performing stocks on our list, giving a highly positive and fruitful 245 percent return in 5 years.
High Net Profit Margin Companies #5 – Aditya Birla Sun Life AMC
Aditya Birla Sun Life is an AMC that was formed through a joint venture between two companies – Aditya Birla Capital and Sun Life (India) AMC Investments. The company provides various investing services to clients like portfolio management, real estate, and alternative investment funds. ABSLAMC offers its services to over 8 million investor folios across its 290 locations in India, with an AUM of ₹2.86 trillion (March 2023).
Financials Of Aditya Birla Sun Life AMC
| CMP | ₹ 359 | Market Cap (Cr.) | ₹ 10,352 |
| EPS | ₹ 20.7 | Stock P/E | 17.3 |
| ROCE | 33.1 % | ROE | 25.3 % |
| Face Value | ₹ 5.00 | Book Value | ₹ 87.4 |
| Promoter Holding | 86.5 % | Price to Book Value | 4.11 |
| D/E Ratio | 0.02 | Dividend Yield | 3.17 % |
| Net Profit Margin | 48.6 % | Operating Profit Margin | 57.5 % |
ABSLAMC is a small-cap asset management company, under the Aditya Birla Group of companies. For the year ending March 2023, the company earned ₹1,227 crores in sales, ₹705 crores in operating profits, and ₹596 crores in net profits.
The company has a strong OPM of 57 percent, followed by an NPM of 48.6 percent. Margins have improved over the years, even though the company’s sales have slightly declined when compared to previous years. Its return ratios are quite impressive, with an ROE of 25.3 and a ROCE of 33.1 percent respectively.
The company also has a low D/E ratio of 0.02, which leaves more capital for investments and reserves. The promoters of ABSLAMC, Aditya Birla Capital, and Sun Life, own a massive 86.5 percent stake, with no major movement in shareholding.
Despite being profitable and earning revenues steadily, the company’s shares have given a negative return of (-48.1) percent since listing in October 2021.
List of High Net Profit Margin Companies In India
| S. No. | Company | Market Cap (Rs In Cr) | Current Price |
| 1 | Indian Energy Exchange | 13,745 | 154.15 |
| 2 | HDFC AMC | 39,490 | 1,850 |
| 3 | Nippon Life India Asset Management | 14,772 | 237.05 |
| 4 | CDSL | 10,380 | 993.3 |
| 5 | Aditya Birla Sun Life AMC | 10346.4 | 359.25 |
| 6 | Easy Trip Planners | 7970.16 | 45.85 |
| 7 | Aptus Value Housing Finance India | 12,917 | 259.35 |
Key Takeaway
A high net profit margin allows a company to retain more funds even when sales stagnate, as seen in some of the companies above. Take every other factor into account when picking stocks, beyond singular important factors like net profit margin. We hope you found this article informative while also understanding the significance of net profit margins. Happy Investing!
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