It shows how much money a company made, spent, and retained during a period. Let\u2019s break it down, with real-world Indian examples.<\/p>\n Also called the Income Statement, the P&L shows:<\/p>\n Revenue \u2013 Expenses = Profit<\/strong><\/p>\n \ud83d\uddd3\ufe0f It is reported quarterly and annually by listed companies.<\/p>\n The P&L gives insight into:<\/p>\n This forms a core part of fundamental analysis of stocks<\/strong><\/a> in India.<\/p>\n Also called Net Sales or Operating Revenue \ud83e\uddfe Example (Tata Consumer Q4 FY24):<\/em> Tracking revenue trends is critical when learning how to do fundamental analysis<\/strong><\/a>.<\/p>\n Direct costs of making the product (raw materials, labor) = Gross Profit \/ Revenue \u00d7 100 \ud83e\uddfe Example (Nestl\u00e9 India):<\/em> Includes:<\/p>\n These are necessary to run the business\u2014but high OPEX can hurt profits.<\/p>\n A rough indicator of core profitability. Non-cash expenses that reduce asset value over time.<\/p>\n = EBITDA \u2013 Depreciation & Amortization High debt = high interest costs = EBIT \u2013 Finance Cost + Other Income<\/p>\n Other Income can include:<\/p>\n \ud83d\udd0d Too much \u201cOther Income\u201d? Core business may be weak.<\/p>\n = PBT \u2013 Taxes \ud83e\uddfe Example (Infosys Q4 FY24):<\/em> \u2705 1. Revenue Growth<\/strong> \u2705 2. Operating Profit Margin<\/strong> \u2705 3. Net Profit & EPS<\/strong> \u2705 4. Consistency<\/strong> \u2705 5. Red Flags<\/strong> \ud83e\udde0 Net Profit Margin = 20.5% \u2192 Efficient and profitable<\/strong><\/p>\n P&L shows profitability. Combine it with:<\/p>\n \u274c Looking only at Net Profit (not revenue\/margins) A company\u2019s P&L tells you if the business is actually making money\u2014and whether it\u2019s sustainable.<\/p>\n “Profit is an opinion. Cash is a fact. But trends in profit speak volumes.”<\/strong><\/p>\n As a retail investor, mastering the basics of P&L gives you an unfair edge in how to analyse stocks in India<\/strong>\u2014especially if you\u2019re aiming to invest in fundamentally strong businesses<\/strong> for the long term.<\/p>\n Related Blogs:<\/strong><\/p>\n Stock Market Investment: Top 4 Equity Investment Tips for \u201cBeginners\u201d<\/a><\/p>\n Why Indicators Fail in Range-Bound Markets (and What to Do)<\/span><\/a><\/p>\n Why Indicators Fail in Range-Bound Markets (and What to Do)<\/span><\/a><\/p>\n What Is Fundamental Analysis? A Beginner\u2019s Guide with Indian Context<\/span><\/a><\/p>\n
\nRetail investors often skip reading it, thinking it’s too technical\u2014but once you know what to look for, it becomes a powerful tool for smart stock analysis for beginners<\/strong>.<\/p>\n
\nWhat Is a Profit & Loss Statement?<\/h3>\n
![\"\"](\"https:\/\/www.gwcindia.in\/blog\/wp-content\/uploads\/sites\/2\/2025\/07\/9ac6ed81-cd1c-4e86-9339-dda5d2668133-800x1200.png\")
<\/p>\n\n
\nKey Components of a P&L Statement<\/h3>\n
1\ufe0f\u20e3 Revenue (Top Line)<\/h2>\n
\n\ud83d\udd39 From core business activities (not from investments or asset sales)
\n\ud83d\udd38 Check for YoY growth\u2014is the business expanding?<\/p>\n
\nRevenue: \u20b93,800 Cr
\n+12% YoY \u2192 Good growth<\/p>\n
\n2\ufe0f\u20e3 Cost of Goods Sold (COGS)<\/h2>\n
\n\ud83e\udde0 Revenue \u2013 COGS = Gross Profit<\/p>\n
\n3\ufe0f\u20e3 Gross Margin (%)<\/h2>\n
\nA higher margin shows better efficiency in operations.<\/p>\n
\nGross Margin: ~55% \u2192 Strong brand pricing power<\/p>\n
\n4\ufe0f\u20e3 Operating Expenses<\/h2>\n
\n
\n5\ufe0f\u20e3 EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization)<\/h2>\n
\n\ud83e\uddfe EBITDA Margin = EBITDA \/ Revenue<\/strong>
\nImportant for sectors like FMCG, pharma, and manufacturing.<\/p>\n
\n6\ufe0f\u20e3 Depreciation & Amortization<\/h2>\n
\n7\ufe0f\u20e3 EBIT (Operating Profit)<\/h2>\n
\nShows actual earnings from core operations.<\/p>\n
\n8\ufe0f\u20e3 Finance Costs (Interest)<\/h2>\n
\nCheck if interest is eating into profits.<\/p>\n
\n9\ufe0f\u20e3 Profit Before Tax (PBT)<\/h3>\n
\n
\n\ud83d\udd1f Net Profit (Bottom Line)<\/h2>\n
\nThe actual profit left after all costs and taxes.<\/p>\n
\nNet Profit: \u20b96,100 Cr
\nNet Profit Margin: ~18% \u2192 Solid performance<\/p>\n
\nWhat Retail Investors Should Focus On<\/h3>\n
\nIs the company expanding consistently YoY?<\/p>\n
\nEfficiency of running the business.
\n\ud83d\udfe2 Stable or rising margin = Positive signal<\/p>\n
\nEarnings Per Share<\/strong> = Net Profit \/ No. of Shares
\nHelps compare profitability across companies.<\/p>\n
\nHas the company delivered steady profits for multiple years?
\nConsistency is a key trait of best stocks for long term investment in India<\/strong><\/a>.<\/p>\n
\n\ud83d\udea9 Declining margins
\n\ud83d\udea9 High other income vs operating income
\n\ud83d\udea9 One-time gains\/losses boosting profits
\n\ud83d\udea9 High interest costs<\/p>\n
\nExample: Simplified P&L of Marico (FY24)<\/h3>\n
![\"\"](\"https:\/\/www.gwcindia.in\/blog\/wp-content\/uploads\/sites\/2\/2025\/07\/Screenshot-2025-07-03-123922.png\")
<\/p>\n
\nP&L vs Balance Sheet vs Cash Flow<\/h3>\n
![\"\"](\"https:\/\/www.gwcindia.in\/blog\/wp-content\/uploads\/sites\/2\/2025\/07\/Screenshot-2025-07-03-124051.png\")
<\/p>\n\n
\nfor the full picture when doing stock analysis for beginners<\/strong>.<\/li>\n<\/ul>\n
\n\u2757 Common Mistakes to Avoid<\/h3>\n
\n\u274c Ignoring one-time gains\/losses
\n\u274c Comparing absolute profits (check % margins instead)
\n\u274c Not tracking historical trends
\n\u274c Over-relying on technical indicators alone\u2014here\u2019s why indicators fail in range-bound markets<\/strong><\/a><\/p>\n
\nFinal Thoughts<\/h3>\n
\n