By VestAI Research | Last updated: March 2026
Net Profit Margin: Meaning, Definition & Indian Stock Market Examples
Net profit as a percentage of revenue — shows what portion of sales becomes profit.
What is Net Profit Margin?
Net Profit Margin is calculated as Net Profit ÷ Total Revenue × 100. It is one of the most important profitability ratios, showing how efficiently a company converts revenue into actual profit after all expenses, interest, and taxes.
Net Profit Margin — Indian Stock Market Example
TCS has net profit margins of 22–26%, among the highest in Indian IT. Reliance Industries' consolidated margin is around 7–9% due to low-margin refining business dragging down higher-margin retail and telecom segments. Airline margins are often below 5% due to high fuel costs.
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Analyse with OrionFrequently Asked Questions about Net Profit Margin
What is the difference between gross margin and net profit margin?
Gross margin = (Revenue − Cost of Goods Sold) / Revenue. It measures production efficiency. Net profit margin deducts all costs — operating expenses, interest, and tax. A company can have healthy gross margins but thin net margins if overheads or debt costs are high.
What is a good net profit margin in India?
It varies by sector. IT services: 20–26%; FMCG: 12–20%; banking (NIM-based, not direct margin); manufacturing: 6–12%; airlines: 2–6%; retail: 2–5%. Compare within sector always.
Related Terms
Gross Profit Margin
(Revenue − cost of goods sold) ÷ revenue — measures production profitability.
Operating Profit Margin
Operating profit (EBIT) ÷ revenue — shows efficiency before interest and tax.
Earnings Per Share
Net profit divided by total shares — profit attributable to each share.
Return on Equity
Net profit as a percentage of shareholder equity — measures capital efficiency.
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