If you have ever read a company’s annual report or a stock analysis, you must have come across the term PAT. But what does PAT stand for, and why do investors care so much about it?
Let’s break it down simply.
PAT Full Form
PAT stands for Profit After Tax.
It is also called Net Profit — the final profit a company earns after deducting all expenses, interest payments, and income tax from its total revenue.
In short: PAT is what the company actually keeps.
What is PAT in Finance?
PAT is the bottom line of a company’s income statement (Profit & Loss Account). It represents the actual earnings left for shareholders after the government has taken its share (tax) and lenders have been paid their interest.
When a business analyst or fund manager says “the company reported strong earnings”, they are almost always referring to PAT.
For retail investors in India, PAT is the single most important profitability number to track — because it directly impacts EPS (Earnings Per Share), dividends, and the company’s ability to reinvest and grow.
PAT Formula
PAT = Revenue − Cost of Goods Sold − Operating Expenses − Interest − TaxOr more simply:
PAT = PBT − TaxWhere PBT = Profit Before Tax
How to Calculate PAT — Example
Let’s say Company ABC has the following financials for FY2025:
| Item | Amount (₹ crore) |
|---|---|
| Total Revenue | 1,000 |
| Cost of Goods Sold | 400 |
| Operating Expenses | 200 |
| EBIT (Operating Profit) | 400 |
| Interest Paid | 50 |
| PBT (Profit Before Tax) | 350 |
| Tax @ 25% | 87.5 |
| PAT (Profit After Tax) | 262.5 |
So Company ABC’s PAT is ₹262.5 crore — this is the net profit reported for the year.
PAT in Share Market — Why Investors Track It
In the stock market, PAT is used to calculate several key ratios:
1. EPS (Earnings Per Share)
EPS = PAT / Total Number of SharesHigher PAT → Higher EPS → Usually higher stock price.
2. P/E Ratio (Price to Earnings)
P/E = Stock Price / EPSInvestors compare P/E ratios across companies to decide if a stock is overvalued or undervalued — and EPS comes from PAT.
3. ROE (Return on Equity)
ROE = PAT / Shareholders' Equity × 100ROE measures how efficiently a company uses shareholders’ money — and PAT is the numerator.
4. Net Profit Margin
Net Profit Margin = PAT / Revenue × 100This shows what percentage of revenue becomes actual profit. A rising net profit margin over years is a strong positive signal.
PAT vs EBIT vs EBITDA — What’s the Difference?
Investors often confuse these three terms. Here’s a clear comparison:
| Term | Full Form | What It Excludes |
|---|---|---|
| EBITDA | Earnings Before Interest, Tax, Depreciation & Amortisation | Interest + Tax + D&A |
| EBIT | Earnings Before Interest & Tax | Interest + Tax |
| PBT | Profit Before Tax | Only Tax |
| PAT | Profit After Tax | Nothing — it’s the final number |
EBITDA is used to assess operational performance and cash generation.
EBIT is used for ROCE calculation.
PAT is used for shareholder returns, EPS, and net profitability.
Each has its place — but PAT is what ultimately matters to a shareholder.
What is a Good PAT Growth Rate?
More than the absolute PAT number, investors look at PAT growth year-on-year (YoY).
| PAT Growth (YoY) | What It Signals |
|---|---|
| Below 5% | Stagnant — low growth business |
| 10% – 15% | Steady — decent performer |
| 15% – 25% | Strong — high-quality business |
| Above 25% | Excellent — high-growth company |
Companies in India like Bajaj Finance, Titan, and Dixon Technologies have delivered consistent 20–30% PAT growth over multiple years — which is why the market rewards them with premium valuations.
PAT and Taxation in India
Indian companies pay Corporate Tax on their profits. The current tax rates for FY2025-26:
- Domestic companies (existing): 30% + surcharge + cess
- Domestic companies (new manufacturing, opted for Sec 115BAB): 15%
- Most listed companies using Sec 115BAA: 22% effective rate
This is why two companies with the same PBT can have very different PAT figures — depending on which tax regime they have opted for and whether they have deferred tax assets or MAT credits.
How to Find PAT for Indian Companies
You can find a company’s PAT on:
- Screener.in — under Profit & Loss statement
- Moneycontrol — Financials → Income Statement
- BSE / NSE website — under quarterly results
- Annual Report — Consolidated Statement of Profit & Loss (last line)
Always check consolidated PAT (which includes subsidiaries) rather than standalone PAT for a complete picture.
Key Takeaways
- PAT full form = Profit After Tax
- It is the net profit a company earns after paying all expenses, interest, and tax
- Formula: PAT = PBT − Tax
- PAT is used to calculate EPS, P/E ratio, ROE, and net profit margin
- Look for consistent PAT growth (15%+ YoY) when evaluating stocks
- Always check consolidated PAT for a true picture of a company’s profitability
Frequently Asked Questions (FAQ)
Q: What is PAT full form in finance?
PAT stands for Profit After Tax. It is the net profit a company earns after deducting all expenses, interest, and income tax from its total revenue. It is also called net profit or bottom line.
Q: What is PAT in share market?
In the share market, PAT is used to calculate key ratios like EPS (Earnings Per Share), P/E ratio, and ROE. A rising PAT generally leads to a higher stock price over time.
Q: How is PAT calculated?
PAT = Profit Before Tax (PBT) − Income Tax. Or more fully: PAT = Revenue − COGS − Operating Expenses − Interest − Tax.
Q: What is the difference between PAT and EBITDA?
EBITDA excludes interest, tax, depreciation, and amortisation — it shows raw operational cash generation. PAT is the final profit after all deductions including interest and tax. PAT is more relevant for shareholders; EBITDA is more relevant for operational analysis.
Q: What is a good PAT growth rate for Indian companies?
A PAT growth rate of 15–25% YoY is considered strong for Indian companies. Consistent growth above 20% over 5+ years typically indicates a high-quality business.
Q: Is PAT the same as net profit?
Yes. PAT and net profit refer to the same number — the final profit after all deductions including tax. They are used interchangeably in financial reporting.
Q: Where can I find the PAT of an Indian company?
You can find PAT on Screener.in, Moneycontrol, BSE/NSE websites, or the company’s annual report under the Profit & Loss statement. Always check consolidated PAT for a complete picture.
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