Reading the Income Statement

Revenue and gross profit

Line one is revenue: ₹682.88 crore, the total value of goods sold before any cost comes off. It grew from ₹613.86 crore the prior year — an 11.24% increase.

Subtract cost of goods sold, ₹402.26 crore, and you reach gross profit of ₹280.62 crore — a gross margin of 41.09%. This is the first profitability checkpoint: what is left of every rupee of sales after the direct cost of making the product, before anything else is paid.

EBITDA, and why it gets its own line

Subtract operating expenses — distribution, marketing, employee costs, admin — and you reach EBITDA of ₹121.51 crore, a margin of 17.79%.

Why stop here rather than run straight to the bottom line? Because EBITDA isolates the core operating business before financing decisions and depreciation are layered on. Two companies can post identical EBITDA and very different net profit purely because of how they are funded. That is the comparison EBITDA exists to make possible — and also why it is the figure most often quoted by a company that would rather you skipped the lines below it.

Depreciation and EBIT

Subtract depreciation of ₹43.50 crore — the allocation of capital already invested in plant and equipment — and you reach EBIT of ₹78.01 crore, an 11.42% margin.

EBIT is the first measure reflecting the real economic cost of the assets the business uses, not just its day-to-day running costs. A capital-heavy business looks very different at EBIT than it did at EBITDA, and that difference is the point.

Interest, PBT, tax and net profit

Subtract interest of ₹13.30 crore and you reach profit before tax of ₹64.71 crore. Subtract tax at an illustrative 25.17% effective rate — ₹16.29 crore — and the final line is net profit of ₹48.42 crore.

The whole waterfall, start to finish: revenue 682.88 → gross profit 280.62 → EBITDA 121.51 → EBIT 78.01 → PBT 64.71 → net profit 48.42. Every number traces to the one above it. If you cannot walk a statement down in that order and have it tie, you have either missed a line or misread one.

EPS, and the trap underneath it

EPS = net profit ÷ shares outstanding. Here, ₹48.42 crore over 10.00 crore shares = ₹4.84 per share. It matters because it expresses profit in a form directly comparable to a share price — which is exactly what builds the P/E ratio.

The trap: share counts change. This company had a 1:4 bonus issue partway through its five-year history. Comparing EPS across that boundary without adjusting for the share-count change compares two differently sized denominators as though they were the same — and manufactures an EPS “decline” that never happened.

Does the EBITDA-to-net-margin gap stay constant?

EBITDA margin is 17.79%; net margin is 7.09%. Will that ~10-point gap hold steady each year?

No. The gap is depreciation, interest and tax combined. Pay down debt and interest falls; let depreciation grow more slowly than EBITDA and that narrows too. Net margin then catches up toward EBITDA margin. Watching that gap close or widen over several years tells you something the single year’s margins cannot.

Common mistakes

• —Treating EBITDA as cash flow. It ignores working capital movements and capital spending entirely.
• —Comparing EBITDA margins across capital-intensity levels as if the businesses were alike.
• —Comparing EPS across a bonus issue, split or large issuance without adjusting the share count.
• —Reading one year’s margins in isolation rather than the trend across several.
• —Confusing the effective tax rate shown here with the statutory rate.