Indian public sector undertakings have achieved a remarkable turnaround in their financial performance, with the profit-to-GDP ratio surging to 1.8% in 2026 from just 0.5% in 2020. According to a report by Motilal Oswal, this represents the sharpest increase in the corporate profit-to-GDP ratio since the lows of 2020, driven by a broad-based earnings recovery across PSU banks, insurance, and oil & gas sectors. The recovery comes after PSU corporate's profit-to-GDP ratio had declined to 0.5% in 2020 from 2.2% in 2008, reflecting significant value migration from public to private sectors during that period. The rally in PSU stocks during 2023-24 was driven by reduced government interference, growing order books, and a positive cycle in core sectors, with significant increase in profits and market capitalization alongside improved fundamentals such as earnings growth and asset quality recovery.
The Indian PSUs have demonstrated a successful comeback with profits jumping 6.2x from ₹1 trillion to ₹6.3 trillion during FY20-26. As reported by Motilal Oswal, more than 36% of these incremental profits originated from PSU banks alone, highlighting the banking sector's critical role in the overall PSU recovery. In FY 2023-24, several PSUs reported impressive profits with State Bank of India (SBI) leading at ₹68,138 crore, followed by Life Insurance Corporation (LIC) at ₹36,844 crore and Indian Oil Corporation (IOC) at ₹41,615 crore. Coal India also showed strong performance with ₹36,942 crore, while ONGC reported a profit of ₹54,705 crore, reflecting a robust recovery across the sector. Public sector banks (PSBs) saw a significant increase in profits from FY 2022-23 to FY 2023-24, achieving a cumulative profit of ₹1.41 lakh crore, compared to ₹1.04 lakh crore the previous year, representing a 35% increase driven by improved asset quality, reduced non-performing assets (NPAs), and robust revenue growth.
Private and multinational companies within the Nifty-500 universe also recorded significant gains, with their ratios surging to 3.2% and 0.24% respectively in 2026 from 1.3% and 0.18% in 2020. According to Motilal Oswal, the private corporate sector's profit-to-GDP ratio had improved to 2.8% in 2008 from 0.8% in 2003, before contracting to 1.3% in 2020 before rebounding to the current all-time high of 3.2%. The corporate profit of Nifty-500 companies jumped 4.6x in the past six years, demonstrating the broader strength across India's corporate sector. On an ownership basis, the corporate profit-to-GDP ratio for private companies within the Nifty-500 reached an all-time high of 3.2% in FY26, up from 3.0% in FY25, while for PSUs, the ratio increased to 1.8% in FY26 from 1.7% in FY25, and for multinational corporations, the ratio stood at a new high of 0.24% in FY26 (0.23% in FY25).
India's nominal GDP grew 8.9% in FY26, a moderation from the 9.7% growth achieved in FY25, as reported by Motilal Oswal. At current prices, GDP rose 9.1% in Q4FY26 versus 9.2% in Q3FY26. The slight sequential moderation was attributed to a sharp slowdown in manufacturing activity and softer external demand, partly offset by continued strength in services, improving agricultural growth, and accelerating investment spending. Despite markets being unsettled by geopolitical challenges, corporate India's earnings strength has become evident across all sectors. Analysts noted that these companies benefited from a favorable environment, leading to a substantial surge in investor interest, with the significant increase in profits and market capitalization, along with improved fundamentals such as earnings growth and asset quality recovery, playing a crucial role in the PSU revival story.
On an ownership basis, the corporate profit-to-GDP ratio for private companies within the Nifty-500 reached an all-time high of 3.2% in FY26, up from 3.0% in FY25, according to Motilal Oswal. The ratio for PSUs also increased to 1.8% in FY26 from 1.7% in FY25, while for multinational corporations, the ratio stood at a new high of 0.24% in FY26 (0.23% in FY25). This ownership-based analysis provides a more accurate reflection of the relative contribution of different corporate ownership structures to India's overall economic profitability. The PSU corporate's profit-to-GDP ratio had decreased to 0.5% in 2020 from 2.2% in 2008, given the significant value migration from public to private sectors such as Banking, Telecom, and Airlines, even as PSU-heavy sectors like Oil & Gas and Utilities underperformed in profit growth compared to the underlying GDP growth, though they have now recovered to the current 1.8% ratio.
