By VestAI Research | Last updated: March 2026
Operating Profit Margin: Meaning, Definition & Indian Stock Market Examples
Operating profit (EBIT) ÷ revenue — shows efficiency before interest and tax.
What is Operating Profit Margin?
Operating Profit Margin = EBIT ÷ Revenue × 100. It measures how much profit a company earns from its core business operations, before interest costs and taxes. It reflects management's ability to control operating costs relative to revenue.
Operating Profit Margin — Indian Stock Market Example
Hindustan Unilever has operating margins of 22–25% reflecting brand power and distribution scale. IT companies like Infosys target operating margins of 20–22%, a key KPI they guide for each quarter. Airlines like IndiGo have operating margins of 4–8% in good years, highly sensitive to fuel prices.
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Analyse with OrionFrequently Asked Questions about Operating Profit Margin
How is operating margin different from EBITDA margin?
Operating margin uses EBIT (which deducts depreciation and amortisation), while EBITDA margin adds those back. For capital-intensive businesses, the difference is significant. EBITDA margin is higher than operating margin by the amount of D&A as a percentage of revenue.
Why do investors focus on operating margin expansion?
Operating leverage means that as revenue grows, operating margins typically expand because fixed costs are spread over more revenue. Companies that show consistent operating margin improvement are often creating significant shareholder value — revenue growth with margin expansion is the ideal combination.
Related Terms
EBITDA
Earnings before interest, tax, depreciation and amortisation — proxy for operating cash flow.
Gross Profit Margin
(Revenue − cost of goods sold) ÷ revenue — measures production profitability.
Net Profit Margin
Net profit as a percentage of revenue — shows what portion of sales becomes profit.
Revenue Growth
Percentage increase in total sales versus a prior period.
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