EBITDA Margin Meaning, Formula and How to Calculate It
EBITDA margin tells you how many rupees a company keeps from every ₹100 of sales, before it pays interest, tax and the cost of wear on its plants.
The formula
EBITDA = sales minus the costs of running the business
Example: Neuland in FY26 had an EBITDA margin of 28.7%.
Where 24 companies stand
Margins differ a lot from one business to another. Compare a company with others in the same sector.
EBITDA margin for FY26.
Why margins rise when sales grow
Some costs, like salaries and the upkeep of plants, do not grow as fast as sales. So when sales grow, more of every ₹100 is left over.
Neuland's sales grew from ₹667 cr in FY19 to ₹2,023 cr in FY26. Its EBITDA margin grew from 8.8% to 28.7%.
Company: Neuland. The line is EBITDA margin. The bars show sales for each year, in ₹ crore.
But selling more does not always mean keeping more
Deepak Nitrite's sales grew from ₹4,360 cr in FY21 to ₹7,887 cr in FY26. In the same years, its EBITDA margin fell from 28.7% to 12.5%.
Company: Deepak Nitrite. EBITDA margin each year.
Three ways EBITDA margin fools you
Check a company
EBITDA margin: common questions
What is the full form of EBITDA?
EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation.
What is the EBITDA margin formula?
EBITDA margin = EBITDA ÷ sales × 100. EBITDA is sales minus the costs of running the business, such as raw materials, salaries, power and other expenses. Interest, tax and depreciation are not taken off.
How do you calculate EBITDA margin?
Take the operating profit from the profit and loss statement (sales minus operating expenses) and divide it by sales. If a company has sales of ₹1,000 crore and EBITDA of ₹250 crore, its EBITDA margin is 25%.
What is a good EBITDA margin?
There is no single number. Margins differ a lot between industries. Compare a company with others in the same sector, and look at whether its own margin is rising or falling over several years.
What is the difference between EBITDA margin and operating margin?
Operating margin (EBIT margin) also takes off depreciation. EBITDA margin does not. So EBITDA margin is always the higher of the two, and the gap is larger for companies with many plants and machines.