Net Profit Margin
Net profit as a percentage of revenue, showing what proportion of each rupee of sales the company finally keeps.
Formula
Net Profit Margin = Net Profit / Revenue x 100
Unit
%
In depth
Net margin is the most quoted margin and the least comparable, because it comes after interest and tax, which reflect financing and jurisdiction rather than business performance. A leveraged company shows a lower net margin than an identical unleveraged one, and a company enjoying a tax holiday shows a higher one. It is also distorted by other income, so a weak operating year can carry a healthy net margin on the back of a one-off gain. Use operating margin to compare businesses and net margin to compute what shareholders actually receive.
Worked example
Net profit ₹90 crore on revenue of ₹1,000 crore gives a net margin of 9%, against an operating margin of 16%. The 7-point gap is ₹40 crore of interest and ₹30 crore of tax — financing and jurisdiction, not operations.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Net Profit Margin” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.