Unlisted cos’ bottom line shrinks post Covid

In A Nutshell

• Corporate NFC sector accounts for 40% of India’s nominal GVA
• Listed sector contributes 30% corporate GVA, or 11-12% of national GVA
• GVA of listed companies improved in post-Covid period (FY20-FY23)
• Listed corporate sector’s debts declined to 13.4% of GDP in FY23

New Delhi: Notwithstanding the more than 2x rise in profits (profit after tax-PAT) of the listed companies in the last three years, the aggregate corporate profit has been largely stable to only slightly better. It means that the profits of the unlisted sector have actually worsened materially in the post-Covid period, as per a research.

According to Motilal Oswal Financial Services, the unlisted corporate sector is not only much bigger than its listed counterpart, the latter has moved in a different direction vis-a-vis the former as per MOFSL estimates. What is more interesting is that while the financial position of listed sector has improved markedly in the post-Covid period (FY20-FY23), this is clearly not the case for the aggregate corporate sector. It means that the financial position of the unlisted corporate sector has weakened in the post-Covid period.

The corporate (non-financial companies, NFCs) sector accounts for almost 40 per cent of India’s nominal GVA. The listed companies, however, contribute only about 30 per cent of the corporate GVA, or only about 11-12 per cent of the national GVA. It means that the unlisted corporate sector is more than 2x the size of the listed sector in terms of GVA. What more, while GVA of listed companies has improved in the post-Covid period (FY20-FY23), it has weakened for the aggregate corporate sector, entirely because of the unlisted corporate sector, the report said.

Not only profits and GVA, the listed corporate sector has also seen a remarkable improvement in its financial position, as they have deleveraged. Debt of listed companies has declined to 13.4 per cent of GDP in FY23, down from 16-17 per cent of GDP in the pre-Covid years.

Like PAT, the unlisted sector accounts for almost half of aggregate corporate PBT in the country.