Your gateway to find great stocks for investment and trading

bear bull

Be Smart, Be Informed

Do your own analysis

No need to rely on tips and recommendations. Use our data to do your own analysis and make informed decisions.

Save Time

No need to browse through different websites for information. We keep historical data in highly searchable format.

Be ahead of others

No need to rely on stale data. We update data that is easily verifiable every EOD from first hand sources like BSE and NSE.

Need New Tools?

Have a great idea

Do you have a great idea regarding an investment tool which can help in increasing your investment and trading profit.

Did not find any one providing that tool

Tried researching, but could not find any one who offers such tools. Wondering how to capitalise on the idea?

No worries :-)

Just share that idea with us. Hopefully we will develop the functionality for you. Drop us a mail at  queries@equityfriend.com

Operating profit or operating income is the amount left with the company after subtracting cost of goods sold and other day to day operational expenses such as employee cost, rent, electricity, transportation etc. from the revenues. It is basically the profit a company earns from its core operations (no other sources). For example, operating profit of Maruti Sujuki means the amount it gets from selling cars after subtracting cost of manufacturing and other recurring operating expenses. It is normally reported as the third highlighted line item after revenues and gross profit in the profit and loss statement (P&L statement) or the income statement.

P&L Statement

The formula to calculate operating profit is:

Operating Profit Formula:

Operating Profit = Revenue - cost of goods sold - employee cost – other recurring operating expenses

From fundamental analysis perspective, operating profit is a crucial figure to observe as it is the direct indicator of companies operational and managerial efficiency. It is important to note that any money that will flow to shareholders in the form of stock price appreciation or dividends is by and large generated from a company's operations (manufacturing and selling products or services efficiently). As a stock market investor, while choosing a company for investment, one must watch this number closely as it reflects the overall demand of the company's products in the market along with companies manufacturing and sales efficiency. The higher the number, the more efficient and profitable the company’s core business operations are. Having said that, one must keep in mind that manufacturing, sales, general, and administrative expenses vary across sectors and comparison of operational efficiency is more meaningful for companies belonging to the same sector.

Let’s have a look at the operating profit trend of two companies from the auto ancillary sector: Amara Raja Battery and Exide Industries

Operating Profit

It’s clear from the chart above that operating profit of Amara Raja has been more uniform in the recent past and we can safely assume that Amara Raja is an operationally more efficient company as compared to Exide Industries. Please note that we are talking about the trend and not the absolute numbers. Number wise, operating profit of Exide is way too higher than Amara Raja and that is attributed to the larger market share of Exide (More revenue than Amara raja).

While analysing operating profit, investors should also keep in mind that for some companies the operating profit follows the economic cycle (Lower in recession and higher in economic boom). Due to this very nature of operational performance, they are called cyclicals (Cement, Auto, Steel etc.). For such companies, the operating profit should be analysed in a larger time frame and the highs and lows should be matched with the economic boom and recession. Any deviation from this behaviour should be a matter of concern and seeks further investigation.


An investment grade company has:

  1. Upward sloping operating profit in larger time frame
  2. Smaller gap between revenues and operating profit
  3. Less variation in the operating profit numbers

If you want to analyse operating profit or operating income of various Indian companies or want to compare operating profit of two companies, please click here.

 Equityfriend – We are there for you

 We provide pan India sub broking and advisory services through ICICI Securities and if you need personal assistance and advisory in starting your investment journey (shares, mutual funds, gold, bonds, fixed deposit etc) please drop a mail atThis email address is being protected from spambots. You need JavaScript enabled to view it.This email address is being protected from spambots. You need JavaScript enabled to view it.


Trading and investing involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. No information available on Equityfriend should be construed as investment/trading tip or recommendation or a warranty of profitable results. All risks, losses and costs associated with investing/trading, including total loss of principal, are completely your responsibility.

No one from Equityfriend Team is a registered Research Analyst as per SEBI (Research Analyst) Regulations, 2014 and the material on this website are provided for information and analysis purpose only. Equityfriend.com is in no way accountable for your use of the website data.