Most Profitable Companies in India 2017

In order to find most profitable companies in India the best tool is Return on Capital Employed (ROCE).



Investors can also look into Profit & Loss accounts to check net profit (PAT) levels. But looking only into ‘net profits’ says less about companies profitability.

It is wiser to look into both balance sheet and earning report to check profitability.

All investors have a common objective of buying stocks of good business. The best business is one that is most profitable. In financial terms checking ROCE is a excellent check of profitability of a company.

Return on capital employed (ROCE) is expressed as percentage (%) of total tangible capital invested in a business.

There are several advantages of being aware of ROCE of a company (more than just PAT). Investors can use profitability levels (ROCE, PAT) of one company and compare it with other. Lets take an example company A & B.

The company with higher ROCE will be considered better for investment. Let us see an example:

PAT Profitability (ROCE)
Company A $ 500,000 6%
Company B $ 250,000 12%

An investor must prefer Company B over A as B’s ROCE is better. But if one does not know the ROCE concept, then by just looking at PAT, he/she will be tempted to invest in Company A. The investing logic is simple, a company which has prospects of faster growth shall be preferred for investing. Return on capital employed (ROCE) gives us this idea.

It shows us how profitable a company is and how fast it can grow its profits in times to come. ROCE measure profitability of a company from point of view of owners.

Suppose you want to generate annual income of say $10,000. In order to generate this income there are two possibilities. One possibility asks you to invest $100,000 and get return of $10,000/year.

The other possibility asks only $90,000 and provides $10,000/year. Which option will you choose? Its obvious that the second option is more profitable. ROCE looks at profitability of business from this angle.

$100,000 & $90,000 is called as capital employed and $10,000 is the return on capital employed. But if ROCE is so effective way to measure profitability of a company then why lot of investors does not use it?

Measure Profitability of a Company using ROCE

The hard part with ROCE is that; where PAT figures are directly available on profit & loss accounts, return on capital employed (ROCE) needs to be manually calculated. In this article we will see how to measure profitability of company using ROCE. To buy shares of good business, it is very important to know the ROCE figures.

Return on Capital Employed (ROCE) = PBIT / Capital Employed

PBIT (Profit Before Interest & Tax)

PBIT can be back calculated from Net Profit (PAT) by adding to it the interest and depreciation. All three figures PAT, interest & depreciation can be easily obtained form the profit & loss accounts of company. In order to compare the profitability of two companies, it is better to use PBIT instead of PAT because PBIT brings companies in same platform. Different companies work in different geographical locations. Working in different locations imposes different interest rates and local tax structures.

PBIT = Net Profit (PAT) + Interest + Tax

Capital Employed

Employed capital gives an idea about how well company is using its funds to run its business. Company generates its funds from shareholders equity and debt it takes from banks etc. Idea of measuring profitability of company using ROCE is to know how much profit a company can generate from its capital employed.

Capital Employed = Shareholders Equity + Debt

This invested capital creates profits (PAT). The objective of any company is to generate maximum profits with minimum capital investment. Lets take an example:

PAT Capital Employed Profitability (ROCE)
Company C $ 500,000 $ 8,333,333 6%
Company D $ 500,000 $ 4,166,666 12%

An investor would like invest in company D over C because it generates the same level of profits (PAT) from less capital employed. This shows that the company D is more profitability than company C.

Most Profitable Companies in India 2015

Most Profitable Companies in India 2017

(Updated as on July’2017)

SL Company name Market Cap (Rs.) ROE % RoCE % Dividend Yield (%)
1 Hero Motocorp Ltd   735.55B 39.57 34.87 2.28
2 Tata Consultancy Services Limited   4.76T 36.66 32.63 1.94
3 Oracle Financial Services Software Ltd.   314.68B 29.86 28.89 4.66
4 HCL Technologies Ltd   1.26T 27.05 25.73 2.71
5 Marico Limited   426.11B 36.78 36.72 1.38
6 Colgate-Palmolive (India) Limited   291.39B 50.11 48.35 1.22
7 Infosys Ltd   2.24T 22.19 21.83 2.66
8 Bajaj Corp Ltd   63.59B 29.86 44.69 2.71
9 Coal India Ltd   1.62T 31.22 11.97 7.79
10 VST Industries Limited   52.24B 36.85 36.05 2.22
11 Interglobe Aviation Ltd   450.42B 51.83 16.7 1.21
12 Asian Paints Ltd   1.12T 27.46 25.9 0.72
13 Ajanta Pharma Ltd   128.45B 36.75 35.85 0.89
14 Britannia Industries Ltd   459.55B 36.94 35.93 0.58
15 Dabur India Ltd   532.95B 28.32 25.25 0.75
16 Page Industries Limited   187.02B 44.54 41.03 0.6
17 Crompton Greaves Consumer Electricls Ltd   127.98B 75.71 29.7 0.73
18 Hexaware Technologies Limited   72.02B 28.44 25.89 1.63
19 Natco Pharma Ltd.   173.95B 33 32.21 0.67
20 Zee Entertainment Enterprises Limited   535.86B 38.77 29.88 0.46
21 DB Corp Ltd   68.93B 25.05 22.92 2.21
22 Rallis India Limited   46.45B 29.75 27.24 2.07
23 Eicher Motors Ltd   792.31B 37.05 36.15 0.34
24 Supreme Industries Ltd   137.56B 28.58 22.55 0.9
25 Pidilite Industries Limited   412.14B 28.16 27.04 0.59
26 GlaxoSmithKline Consumer Healthcare Ltd   230.94B 22.18 20.53 1.28
27 Aurobindo Pharma Ltd   438.46B 27.63 26 0.52
28 Tata Elxsi Limited   52.59B 36.69 35.29 0.95
29 Gulf Oil Lubricants India Ltd   40.83B 40.21 39.23 0.92
30 Monsanto India Limited   46.43B 31.29 30.21 1.11
31 Godrej Consumer Products Limited   655.92B 27.26 15.69 0.78
32 Bharti Infratel Ltd   764.06B 16.28 15.41 3.94
33 Supreme Petrochem Ltd.   34.55B 36 32.57 1.29
34 Cummins India Ltd   279.20B 20.71 16.89 1.44
35 Berger Paints India Ltd   244.36B 27.35 23.02 0.58
36 Tech Mahindra Ltd   385.91B 18.13 15.88 2.3
37 Cadila Healthcare Ltd   539.11B 22.17 17.75 0.91
38 Kushal Tradelink Ltd   32.90B 73.85 72.42 0.87
39 NMDC Limited   388.05B 22.18 9.8 8.91
40 Indiabulls Ventures Ltd   80.21B 25.65 16.09 1.69





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Disclaimer: All blog posts of getmoneyrich.com are for information only. No blog posts should be considered as an investment advice or as a recommendation. The user must self-analyze all securities before investing in one.

About the Author

Mani
I am a Blogger with a passion for investment education. I started blogging in 2007-08. Blogging didn’t happened to me as a coincidence, it was a conscious decision. The idea with which I started blogging still stands true. In my starting days my finances remained tight. I was reading heavily about how to manage finance. One day I got hold of a book which my father gifted me in 2003. It was stacked below my graduation books. It was a small-thin book with its cover named "Rich Dad Poor Dad".....more

5 Comments on "Most Profitable Companies in India 2017"

  1. soumen kumar roy | December 2, 2012 at 8:50 am | Reply

    i am a follower of ur blog.Ur recent post (Posted: 30 Nov 2012 09:08 AM PST) grow my interest.Basically i am a mechanical engineer,invested in some of cases & every times book losses.so,i am searching the ways of making profits.Ur thinking & motivating writing astonished me very much.
    keep writing which inspires so many readers like me.
    I am trying to capture yr article,but fail to understand.so,if you kindly describe the magic formula for first 1 to 10 rank company in nse or bse by calculating. I would be grateful if you could mail me a sample calculation of any such companies.

    Thanking u.

  2. Sir.
    I am new to investing and have gone through the article which was very educative. To learn more on this I tried to calculate ROC and Earnings Yield of a sample company TCS. Although calculation of Earnings yield was simple, ROC was bit confusing. I was looking both Bal sheet and profit and Loss statement of TCS provided by moneycontrol site. The following are my doubts.
    1. Is PBIT and PBDIT the same.
    2. The is no figure for PAT, but Net profit is there. Is this the PAT.
    3. when calculating Fixed asset with the formula Gross Block – Current Asset, i found it was coming negative, since current asset was more than gross block.
    4. Where to get the working capital and fixed assets figures from.

    I would be grateful if you could mail me a sample calculation of any company with its connected financial statements, I could corelate the same and learn more.

    Thanks and Regards.
    Ms Rehna Ghosh

  3. payday loans | June 26, 2012 at 5:09 pm | Reply

    This is a topic which is near to my heart…
    Thank you! Exactly where are your contact details though?

  4. your blog is very nice very nice

  5. Is there any tool available that calculates the ROC automatically..like a calculator?
    Thanks

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