Which companies have the highest profit margin in India right now?
As per Equitymaster's Stock Screener, these are the high profit margin companies in India right now - ...
These companies have been ranked as per the most recent financial year’s net profit margin.
The net profit margin measures how much profit a company generates as a percentage of its revenue. The higher, the better.
However, there are other parameters you should take into account as well before forming a hard opinion on the stock.
How is net profit margin calculated?
The net profit margin of a company is calculated by dividing net profit by total revenue.
Net profit margin = Net profit / Total revenue.
What is a good net profit margin?
There isn't anything such as a good profit margin for a stock. It varies from industry to industry.
For a manufacturing company, net profit margins could be between 2%-5% while for an IT company this could be between 18-20%.
The general thumb rule is – the higher, the better.
Why is it important to assess the profitability of a company?
Profitability is the primary goal of all business ventures. Without profitability, the business will not survive in the long run. So, measuring current and past profitability and projecting future profitability is very important.
Profitability of a company can be assessed in several ways, including its profit margins, return ratios.
What are the other important parameters to consider besides profitability?
Besides profitability, you need to consider other important parameters such as:
- Operating ratios
- Leverage ratios
- Valuations
- Industry trend
- Management