Most profitable share in Indian Market 2017

Investors are always inclined to buy the most profitable share available in Indian market.

My definition of profitable share was, that stock which displays highest operating profit margins.

But during last days, something happened which changed my lookout and definition of profitable stocks.

While doing the study on the most profitable share, one of the first filters that I used was volume. I preferred those shares which trade above a certain volume.

Market capitalization also dominated my screening criteria. I preferred high market cap stocks.

Apart from operating profit margin, volume, and market capitalization, I also ensured to pick only those stocks which had at least last 5/10 years financial data available on internet. The reason being, in order to do further detailed stock analysis, I needed at least this much data base.

There was no big logic about doing it this way. Perhaps I was comfortable to screen stocks like this, as it worked for me.

But one day I decided to drift from my usual screening criteria.

True to my belief, I found some very interesting mid cap stocks during my analysis. These were stocks with huge profit margins.

But while I was analyzing their fundamentals deeply, I had some stunning realizations. In fact for me these realizations are so big that, it will change forever that way I see profitable shares.

As soon as I realized these facts, I immediately corrected my search criteria. Now the filter that I use to analyze profitable companies had few new additions.

I will tell you about my realization in the following lines. But first lets see my initial list.

The list of decently big stocks having high operating profit margins:

SL Name Sector Operating margin (5YA) SL Name Sector Operating margin (5YA)
1 Housing Urban Develop Financial 89.96% 26 Rural Electrification Financial 35.62%
2 PNB Housing Finance Financial 87.96% 27 Divi's Labs Healthcare 34.18%
3 Bajaj Holdings Financial 86.02% 28 RBL Bank Financial 32.08%
4 L&T Finance Hld Financial 73.18% 29 Kotak Mahindra Bank Financial 31.76%
5 Gujarat State Petronet Utilities 70.64% 30 Zee Entertainment Services 30.78%
6 Power Grid Utilities 58.25% 31 Zee Entertainment Services 30.78%
7 SJVN Utilities 57.85% 32 Power Finance Financial 30.30%
8 NMDC Basic Materials 55.81% 33 Piramal Enterprises Healthcare 30.00%
9 AU Small Finance Bank Financial 55.80% 34 DLF Capital Goods 29.33%
10 Yes Bank Financial 51.87% 35 Ajanta Pharma Ltd Healthcare 29.25%
11 Adani Transportation 50.42% 36 ITC Consumer/Non-Cyclical 29.20%
12 Oberoi Realty Capital Goods 49.33% 37 GRUH Finance Financial 28.89%
13 Sun TV Network Ltd Services 48.89% 38 CRISIL Services 28.48%
14 HDFC Bank Financial 47.76% 39 JSW Energy Utilities 27.82%
15 Cairn India Energy 45.82% 40 Muthoot Finance Financial 27.17%
16 NHPC Utilities 44.25% 41 Bajaj Finance Financial 26.74%
17 IndusInd Bank Financial 43.97% 42 Sun Pharma Healthcare 26.47%
18 Hindustan Zinc Basic Materials 43.28% 43 Tata Consultancy Technology 26.42%
19 AXIS Bank Financial 40.07% 44 NLC India Utilities 25.92%
20 Bajaj Finserv Financial 39.40% 45 Oil India Energy 25.91%
21 Lic Housing Finance Financial 38.13% 46 ICICI Bank Financial 25.48%
22 Motilal Oswal Financial 36.54% 47 Indiabulls Ventures Financial 25.09%
23 Federal Bank Financial 36.36% 48 Infosys Technology 25.05%
24 JM Financial Financial 36.28% 49 Indian Bank Financial 24.20%
25 Oracle Technology 36.09% 50 AIA Engineering Capital Goods 23.60%

Profitability and Nature of Business

These are top 50 stocks with high operating margins. The operating margin range from 23% to 89%.

The value of operating margins could be even higher, but remember that we have enforced the filter of market capitalization and trading volume.

Just to give you an idea, a typical company in India works at an average operating margin of 14.81% (average of top 500 companies).

So, what made the above 50 companies so profitable?

The answer is right in front of our eyes. The nature of business is the answer. See this table:

Most Profitable Share_OldStyle_20171128

Out of total 50, 24 companies are from Financial Sector. Most of them are Banks or NBFC’s. Banking companies have lower expenses, hence they exhibit higher operating margins.

Other sectors which has featured in our top 50 most profitable companies are Utility, Services, Healthcare, Capital Goods, Basic Material, Energy and Transportation.

This highlights the fact that some sectors are inherently profitable. Hence, good companies operating in these sectors has more chance to be profitable.

The next step was clear for me. It was only prudent to find average ‘operating profit margin’ of sectors as a whole. This exercise was certainly going to give me new insights into the profitability of companies.

So, I did a small number crunching and the result is presented here for your reference.

Most profitable sectors in India

I prepared a list of top 500 companies in terms of market capitalization. Operating profit margin (5years average) was also recorded for all 500 companies

After this exercise of data collection, the next step was simple. Calculating average of all individual sectors is a quick job in MS EXCEL.

As a result of this exercise, data analytics of most profitable sectors in India got collated.

Average operating profit margin (5Y average) of the sectors operating in India are as follows:

  1. Utilities – 25.88% (7% to 70%) – 21/500 companies.
  2. Financial – 24.72% (-15% to 91%) – 79/500 companies.
  3. Healthcare – 15.67% (-3% to 35%) – 40/500 companies.
  4. Transportation – 15.58% (-4% to 50%) – 13/500 companies.
  5. Services – 14.33% (-13% to 66%) – 43/500 companies.
  6. Consumer Goods (non-cyclical)– 13.02% (-2% to 29%) – 38/500 companies.
  7. Technology – 12.75% (-10% to 36%) – 37/500 companies.
  8. Energy – 11.56% (1% to 45%) – 15/500 companies.
  9. Basic Material – 11.49% (-5% to 55%) – 80/500 companies.
  10. Capital Goods – 11.47% (-50% to 77%) – 81/500 companies.
  11. Consumer Goods (cyclical)– 9.15% (1% to 19%) – 51/500 companies.
  12. Conglomerates – 1.86% – 1/500 companies.

Most Profitable Share - 20171128_Sector

Most Profitable Share for Investors

From investors point of view, which companies are best for investing? Large size companies having high profitability is best for investors.

How to know which company has high profitability?

There are several financial ratios which deals with this query. In this post we have already dealt with operating profit margins.

A very widely used profitability ratio is net profit margin. But it is not the best ratio to identify the most profitable share.

It is also true that my logic of identifying most profitable stocks via only operating profit margin was also partially flawed.

It inherently favoured companies of utility and finance sector. So what next?

To get a good answer, we will have to think like a business man.

If a business man wants to buy a stocks, he will pick which company?

The company which generates more profits for every Rupee of invested capital will be preferred.

Suppose I invest Rs.8Mn in Business-A and another Rs.10Mn in Business-B. Both the companies made Rs.1Mn of profit.

It means, Business-A generates Rs.0.125 for every invested-Rupee (12.5%). Business-B generates Rs.0.1 for every invested-Rupee (10%).

It means Business-A is more profitable than B.

A financial ratio called Return on Equity (ROE) evaluates profitability of companies using this same logic.

ROE = Net Profit / Shareholders Equity. 

Shareholders Equity is all monies that has been invested in the business by the shareholders.

Shareholder’s Equity = Net Worth = Share Capital + Reserves.

The more profits a company generates, per Rupee of shareholders invested capital, the better is the company for its investors.


If one wants to find most profitable share, looking only into operating margin is not enough.

A stock which has a combination of high operating profit margin and high ROE can be tagged as the most profitable share in Indian market.

In this article, I will list down few high ROE and high Operating Margin stocks. Here I have tried to indicate name of at least one stock from each profitable sectors.

Most profitable Share in Indian Market 2017

(Updated on November’17)

SL Rank in Top 500 Company Sector ROE (%) Operating Margin (%)
1 1 Dewan Housing Finance Corpn. Ltd. Financial-Housing Finance 43.11 84.69
2 2 Gruh Finance Ltd. Financial-Housing Finance 30.45 91.74
3 3 Credit Analysis & Research Ltd Financial-Credit Ratings & Information 32.66 74.97
4 4 Eris Lifesciences Ltd Healthcare-Drugs & Pharma 57.63 39.70
5 5 Bajaj Corp Ltd. FMCG-Cosmetics & Toiletries 44.76 38.04
6 7 8K Miles Software Services Ltd. Technology-Computer Software 46.21 34.87
7 8 Caplin Point Laboratories Ltd. Healthcare-Drugs & Pharma 56.14 33.77
8 9 Castrol India Ltd. Energy-Lubricants, etc. 115.24 32.40
9 11 Indiabulls Ventures Ltd. Financial-Hire Purchase 26.47 75.33
10 12 Sun TV Network Ltd. Services-Media & Entertainment 26.71 72.71
11 13 Adani Ports and SEZ Ltd. Services-Shipping 25.09 79.77
12 15 Oracle Financial Services Software Ltd. Technology-Computer Software 31.13 42.70
13 16 Symphony Ltd. Cons Durable-ACs & Refrigerators 42.59 31.44
14 20 Eicher Motors Ltd. Automobile-Commercial Vehicles 34.13 34.14
15 22 Hindustan Zinc Ltd. Metals-Other Non-Ferrous Metal 24.39 64.97
16 25 VST Industries Ltd. FMCG-Tobacco Prod. 37.07 29.92
17 26 Tata Communications Ltd. Communication-Telecom.Services 200.30 26.33
18 27 Tata Consultancy Services Ltd. Technology-Computer Software 33.64 30.97
19 28 Rural Electrification Corpn. Ltd. Financial-SIDCs/SFCs 20.18 95.21
20 29 Advanced Enzyme Technologies Ltd. FMCG-Food Processing 25.03 46.34
21 30 JM Financial Ltd. Financial-Misc. 20.48 82.57
22 33 ITC Ltd. FMCG-Tobacco Prod. 24.27 40.24
23 34 Balrampur Chini Mills Ltd. FMCG-Sugar 42.42 25.84
24 38 Triveni Turbine Ltd. Engineering-Industrial Machinery 33.92 26.43
25 42 PI Industries Ltd. Chemicals-Pesticides 33.14 25.98
26 43 Monsanto India Ltd. Chemicals-Pesticides 31.29 26.55
27 44 GHCL Ltd. Chemicals-Soda Ash 31.90 25.65
28 45 Balkrishna Industries Ltd. Automobile-Tyres & Tubes 22.69 37.15
29 48 Dr. Lal Pathlabs Ltd. Healthcare-Health Services 26.78 28.68
FURTHER READING Disclaimer: All blog posts of 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.

9 Comments on "Most profitable share in Indian Market 2017"

  1. James kutty joseph . | November 12, 2017 at 12:18 am | Reply

    very nice blog .. can i change my investment to these companies , now if this is the latest updates for most profitable companies . please reply .

  2. I think apart from Operating Margin and ROCE (both based upon last 10 years average numbers), what one must additionally look at is D/E ratio and free cash flow from the business. And above all, stock should be available at a reasonable valuation leaving room for appreciation in future. In isolation, these numbers look great, but, if you carefully look at the table, you will find that most of the good stock are having a P/E of more than 25 or even 30 which is higher in today’s plateaued market.

  3. i have 50,000/- looking to invest for 1 year in which company shall i invest were i can get good return .

  4. Dude, is the last table again a 10 year average?? Consider this TCS (IT) was a very good sector 8 years back but in bad shape since last 3 years. A higher weigtage needs to be given to recent data and less to performance 10 years back.

    • Anu, IT in India will always be a good a good sector because of the kind of quality software engineers we have in India. Moreover, we must enter market when chips are down otherwise we will end up buying only expensive stocks

  5. Great post!! Appreciate your effort to educate retail investors in India. Hope some of them will be multubagger stocks.
    Thanks keep posting similar stuff.

  6. This is a great approach for identifying investment candidates. However it needs data, analysis and interpretation. Another approach could be using ready-made free tools available on various websites which process the data at back-end and throws the result & insights in easy to understand format. Even a layman can simply pick the fundamentally solid stock.

  7. Sabyasachi Sadhu | April 14, 2017 at 6:16 am | Reply

    Most of these stocks have given multi-bags return in past, but still a very good choice for future good returns, still we can extract lot of juice of these stocks.

  8. What is Your Opinion About DeltaCorp in Intraday or Short Term

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