Top 5 Indian Stocks with Consistently Rising Operating Margins

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operating margins. Operating margin measures the percentage of revenue a company keeps as operating profit. It indicates the profitability of a business and facilitates competition among competing businesses or different industries.

Investors highly value stocks with consistently rising operating margins. These stocks have the ability to generate consistent profits thereby creating value for shareholders. Additionally, stocks with consistently rising operating margins tend to be more resilient during economic downturns.

Their ability to manoeuvre choppy markets often demonstrates effective cost controls, efficient operations, and strong leadership. Considering these factors, we highlight five Indian stocks with consistently rising operating margins. First on our list is the HDFC Bank.

HDFC Bank, the largest private sector bank in India, enjoys a market share of more than 15% in most retail loan categories like unsecured retail and vehicles segment. The lender's business has grown substantially over the years, with the advances jumping 2.4x in the last five years. While expanding its business, the company has increased its profitability.

The operating margins have improved consistently, from 31.3% in fiscal 2020 to 37.4% in 2022. The net profits have grown considerably, reporting a 5-year CAGR of 20.1%. The return on equity (RoE) is at an admirable 5-year average of 17%.

This performance is led by the company's strategy to avoid undue risks for the sake of expansion. The bank has maintained its asset quality thanks to its conservative attitude with its margins and provisioning policies. The net non-performing assets (NPAs) have remained rangebound (0.3-0.4%) from the financial year 2018, the lowest in the industry.