Most Profitable Share in India: How To Identify Such A Business [2022]

Most Profitable shares in India - image
" When we say profitable companies, we should look for businesses that are inherently profitable. Such businesses bought at a fair price eventually becomes profitable for their shareholders as well. How? They render a faster share price appreciation in a long term. "

When we inquire about the most profitable share in India, what are actually enquiring? We are searching for those shares that have been most profitable for its shareholders in the past. How to identify such shares?

(Updated: 25-June-2022)

SLNamePrice (Rs.)Sub-SectorROE-5Y (%)RoCE-5Y (%)OPM-5Y (%)GMR Score
1Kanchi Karpooram590.00Chemical Machinery43.0150.424.3583.57
2East India Securities1,320.00Brokerage Services13.7617.2580.7283.26
3GUJTHEMIS410.35Drugs & Pharma56.8759.1229.0783.1
4VSTIND2,990.85Tobacco Products36.0352.6635.2782.77
5ISEC436.05Brokerage Services6656.350.2782.65
6SUPRIYA330.7Drugs & Pharma41.2434.3227.0682.49
8TAAL Ent.1,540.70Air Transport49.7761.825.7281.08

When we inquire about the most profitable share in India, what are actually enquiring? We are searching for those shares that have been most profitable for its shareholders in the past. How to identify such shares?

There can be two types of approaches to answering this question. The first is based on historical price appreciation, and the second is based on the profitability of the underlying business.

In the ‘price appreciation approach’, one can check the past price growth rate, and accordingly decide if the stock has been profitable or not. Example: Market price growth of TCS in the last 5 years has been 14.5% per annum.

Judging the profitability of stocks based only on their price appreciation is like incomplete work. It is mandatory to also look into the profitability of the underlying company to take a more reliable decision.

Profitability Approach:

Most Profitable shares in India - Fundamentals vs share price

In the ‘profitability’ approach, one can check if the underlying company is inherently profitable. How to do it? Check the following:

  1. Profitable Sector: A company which is operating in a sector which itself is profitable, eventually makes the company also profitable. Which are these sectors? These are essentially those sectors where competition is less. Read more best sectors in India.
  2. High Operating Profit Margin: A company whose ‘operation’ generates more profit per unit cost consumed can be called ‘inherently profitable’. Operating Profit Margin is a perfect financial metric which highlights such inherently profitable companies. Read more about profit margin analysis.
  3. High ROE: Operating profit sees ‘inherent profitability’ from operations point of view. ROE sees this from shareholder’s point of view. A company which is generating more profit for every dollar of shareholder’s money (Equity), can also be called as inherently profitable. ROE is a great metric to highlight such companies. Read more about how to calculate ROE.

The above three parameters will help us to identify potentially profitable shares which are being traded in the Indian stock market. But there is a small problem. It is not easy to check the profitability of a sector as a whole.

Go for a shortcut?

Why not straight away pick those stocks which have high operating profit and high ROE?

Sure this can be done. But adding one more layer of safety will only help us as an investor. How? Because there are fewer chances of companies making a loss that operates in such a sector.

Hence, no matter how difficult it is to judge the profitability of a sector, we will try to estimate it anyways. Idea is to identify the most profitable sectors of the Indian stock market.

Once we have such data, we will pick good stocks operating in these sectors. These stocks will be ‘inherently’ most profitable shares of the Indian stock market.

So let’s start our analysis. 

Screening Profitable Shares

Most Profitable shares in India - Process of Screening

To identify profitable shares, we will use the below steps:

  1. Profitability of Stock Market: In this step we will try to estimate the average profitability of the whole Indian stock market. How to do it? We’ll pick all stocks listed in S&P BSE-500 Index. Average ROE and Operating profit margin of all these stocks will give us an approximate idea of the profitability of Indian stock market. Read more about what is share market.
  2. Profitability of Sectors: In this step we will pick those sectors, whose average profitability is more than the average profitability of the total market. These will be our ‘most profitable sectors’. Know about stock’s having high weightage in Sensex Nifty.
  3. Profitable Shares: Among the profitable sectors, we will individually check all their stocks. The stocks which will display high operating profit margin, and high ROE will be those stocks which we will tag as ‘inherently profitable shares’. How to use RoCE and ROE to identify profitability.
  4. Price Growth: This is the final step. The list of stocks which we will tag as inherently profitable, on these stocks we will do one more check. We will check their past price growth rates. This will be done just to understand if the strong fundamentals of the company has actually translated into price appreciation or not. Read more about highest return stocks in last 10 years.

I’ve implemented the above 4 steps and identified few Indian stocks which looks inherently profitable. Let’s see how the same has been implemented.

Step #1: Profitability of Stock Market

Individual stocks of the Nifty-500 index are representative of their sectors. Hence it is safe to assume that the Nifty-500 index in totality is also a reliable representative of the whole Indian stock market.

So just to get a macro view of the Indian stock market, I will try to estimate its profitability. How to do it?

  1. Calculate profitability of individual stocks (500 nos). 
  2. Calculate average of these 500 stocks.

What will be the measure of the profitability of individual stocks? Operating Profit and ROE. So here is the first result: overall profitability of the Indian stock market:

Most Profitable shares in India - Profitability of Whole Stock Market

Overall profitability of “Indian stock market” is as below:

  • Operating Margin: 22.92% 
  • ROE: 13.69%

Knowledge about these two values will give us a better visualization of the most profitable sectors. How? Sectors that have Operating margins and ROE above the market average, will be necessarily more profitable. 

Step #2: Profitability of Sectors

Most Profitable shares in India - Profitability of Sectors

All stocks listed in the Indian stock market can be broadly classified into the above 15 sectors

How to comprehend the above data? In two different ways:

  • FIRST, compare profitability of the ‘overall stock market’ with each individual sector. This will give a nice visualisation that how profitable are the individual sectors compared to the average (overall market). Example: To understand how profitable is “Energy” sector, compare its percentile rank with that of the total market. Overall Market: 70.3%, Energy Sector: 92%. This comparison gives an idea that Energy sector is inherently more profitable than the average stock market.
  • SECOND, compare profitability of one sector with another. This will again give a nice visualisation that how profitable are each sectors compared to each other. Example: Suppose you want to understand which sector is more profitable than Energy sector. From the above table you can see that only Auto sector’s percentile rank (100%) is above Energy sector.

The usage of percentile ranking has dual benefits. It not only highlights which sectors are more profitable, but it also highlights the degree of profitability of sectors with respect to each other. 

Let’s consider the case of the Financial sector (83%) and the Technology sector (82%). Though the Financial sector’s rank is higher, in terms of ‘degree of profitability, there is hardly any difference between the two. This means both are almost identical.

Similarly, compare FMCG (Rank 6th) & Chemical sector (Rank 7th). Though they are separated by only one rank, in terms of Percentile Rank, their difference is close to 10%. This means FMCG (80%) is much more profitable than the Chemical sector (70.4%).

Step #3: Identify the most profitable shares operating in above sectors

In Step 2 we were able to identify 7 sectors whose profitability is higher than the profitability of the average market.

Now our task is cut out to find profitable shares within these 7 sectors. How do find these shares? This will be done in two steps:

  • Step A: First we will pick those stocks from these 7 sectors whose profitability is more than that of the stock market.
  • Step B: Then we will rank these shortlisted stocks in order of their profitability. Idea is to prepare a short list of most profitable stocks in India.

Please check the bottom of the post for the list of stocks.

Step #4: Past Price Growth

This step is not essential, but I do it anyway for myself. Why do I do it? Because it gives me a good feeling about my shortlisted stocks. How?

What we have done in Step1 to Step3 is shortlisting stocks based on their business fundamentals.

Step4 will verify if the strong fundamentals of these stocks have actually translated into their long-term price growth or now.

Please check the bottom of the post for the list of stocks with their past 10-year price growth rate.


This is an approach that I personally use to identify the most profitable shares for myself. What is the proof that these are good stocks and will perform well in the future? Frankly speaking, there is no proof to confirm future performance. But I believe that this kind of profitability analysis can never let its analyst down.

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49 Responses

  1. how have you calculated percentile scores and what it reflects to?. That is the only point out of understanding . Otherwise it was pretty simple and nice read .

  2. Hi..I read your articles..I really like your analysis. I request you to make an article about coffee can investing concept and suggest list of stocks based on this concept

  3. Hi
    Which one is better for investment indivisual stick or invest in nifty-50 if I invest in Ididivisual pl suggest 5 stocks.

  4. Thank you for your knowledge sharing. It’s very impressive and easy to read and understand.
    Can you share the method of knowing average ROE & OPM of nifty 500 and nifty sectors as shown in the picture?

  5. Hi Mani, first of all hats off to you. I can surely co-relate with you as i have a same career path as yours with only exception you of being a financial expert.

    The list shared here lists most profitable shares, but if i pick any one of these and run it through your stock analyzer that i purchased, it shows all these stocks are overvalued and scores below 85%. I didnt quite get this.

    1. Thanks for your compliments. All profitable shares are not always trading at purchasable price.

      1. Debt Free Stocks
        Mani, very well researched, compiled work on many topics in the Financial Markets. Kudos ! With reference to your list of ‘Debt Free Stocks’ , you have listed many companies. Could you please share the parameter for sequencing these ? Secondly, it seems to be a partial list with many cash rich debt free companies missing, even though they may be having a high negative DMC figure (such as Infosys, Persistent Systems, etc) Is there some other parameter for this? Thanks

  6. If you could sell an stock analysis worksheet for banking related stocks it will be good. Your traditional stock analysis worksheet not working for banking sector stocks..

    1. Yes, it is not coded for banking stocks. The same has been declared in the product page. Thanks for your comment.

  7. Sir your blog is very informative as well as a great tool for beginners to start understand what is share Market how, where and why investing in the market…. Also for experience players of market to grab the opportunity & enhance their knowledge….

  8. Hi

    I have just started a job and recently graduated from the college, so i don’t know about where to invest, i am very much fascinated about the stock market. I want to invest for the long term but the shares you have suggested is very much costly like HEG, Bajaj finance ….. so can you please suggest stocks like mannupuram finance so that a no nothing investor can easily invest their money and good returns in future.

    1. Hey Gaurav Goyal. I personally found PCJ, ONGC and Tata Motors doing well in the month of February to April. I have been able to make profit of more than 1.5 lacs by investing 1.2 lacs . So total of 2.7 lacs . I did short term investment. To know more you are welcome to visit

  9. From where can we get average ROE and Operating Profit and Profitability figure for NSE-500 and Sectors.

  10. Mani,
    appreciate your en-devour to help educate retail investors and the analysis is a good one of past performances.
    the list thrown up is heavily tilted to Housing finance /NBFC? financing sectors. we are coming out of low interest regime which favoured these sectors with high returns. Most of these shares are being dumped by big institutional investors who manage huge sums of money.

    1. Thanks for your comments. Banks, NBFC’s etc are inherently profitable companies. No investor can afford to stay away from them for an extended period of time. On one side we hear news of “institutions” dumping such stocks. On the other hand ace investor like Jhjhunwala is buying stocks like DHFL, why? Because when a good business is available @discounted price levels, it must be grabbed.

  11. FMCG giving negative returns is not a correct picture. I guess they are the once which are more profitable and are always trading at a very high P/E ratio

    1. The overall FMCG sector is showing (-)ve values for ROE. Having said that, in the list of 50+ most profitable stocks, 5 are from FMCG Sector. This is evident from their high ROE & Op. Profit margins. But on one side this (high profitability) is an advantage, but on other side it also poses a risk (excessively high P/E ratio). More often than not such high P/E stocks leads to losses fro retail investors.

  12. This is the best blog and provides a worthy guidance for the individuals who wish to invest in the stock market. This blog helps to identify the profitable stocks and gives a detailed information on how to analyze the companies based on their performance so that accordingly the individuals can take investment decisions. It also tells us on what basis the profitability of the company is measured. This article has explained the concept in a very detailed manner and has done a good research analysis.

      1. Dear Mani, I have lost 2 lakhs in the stock market recently because of day trading in equities and I entered the market without any guidance and experience. Now I have got some experience and seeking your advice regarding in which stocks should I invest so that I can get back my money at the earliest. I have 2.5 lacs to invest. Looking forward to hear from you. Regards, Rajendrakumar

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