India's corporate sector rebounded stronger post pandemic, says RBI study

The RBI released a study titled, Resilience and Revival: India's Private Corporate Sector, in its monthly October Bulletin.

The study highlights how India's private corporates navigated the COVID pandemic shock and emerged stronger. Based on financial data of listed non-government non-financial companies, the study underscores the sector's ability to withstand global shocks with adaptability, profitability, and strengthening of balance sheets in the post-pandemic period.

The study showed that corporate sales rebounded sharply post-pandemic, peaking at 32.5 per cent growth in 2021-22 over the contraction recorded during the pandemic period, before stabilising at 7.2 per cent in 2024-25.

Net profits rose significantly to ₹7.1 trillion in 2024-25 from ₹2.5 trillion in 2020-21. Consequently, the net profit margin improved to 10.3 per cent during 2024-25 from 7.2 per cent in 2020-21.

Corporates continued to deleverage their balance sheet supported by capitalisation of higher profit, with debt-to-equity ratios improving across firm sizes.

Interest coverage ratio for manufacturing firms improved significantly, reaching 7.7, on an average during post-COVID period, reflecting robust debt-servicing capacity.

Large firms drove profitability, while medium and small firms demonstrated greater improvement in debt servicing capacity than the large firms.

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