Growth-Stage Metrics · Intermediate · Pro filter
Rule of 40: what it means and how to read it
Sales growth % plus EBITDA margin %. A test borrowed from software investing: the two together should reach 40 or more.
What is Rule of 40?
Sales growth % plus EBITDA margin %. A test borrowed from software investing: the two together should reach 40 or more.
A worked example
Sales growing 30% with a 15% EBITDA margin → 45.
Why does Rule of 40 matter?
Balances growing fast against making money.
How do you read Rule of 40?
40 or more passes.
Reading scale
In score
Below the bar
Near
Passes
0304060+
On the scale used here, below 30 reads as below the bar, 30 to 40 reads as near, and 40 and above reads as passes.
Higher is usually better.
Revenue growth plus EBITDA margin
What is a typical Rule of 40 in India today?
The median across the 4361 listed companies that report it, as of 12 Oct 2026. Half sit above each figure and half below.
By company size
Median
Large Cap · 70 companies35.2
Mid Cap · 116 companies38.5
Small Cap · 4175 companies26.4
By industry
Median, largest industries first
Pharmaceuticals · 20131.2
Computers - Software & Consulting · 5731.3
Refineries & Marketing · 814.5
Power Generation · 2959.6
Auto Components & Equipments · 11428.4
Heavy Electrical Equipment · 4142.4
Cement & Cement Products · 3225.9
Civil Construction · 12227.5
Aerospace & Defense · 3247.4
2/3 Wheelers · 1037.7
Compare a company with its own industry before the whole market. Every industry, and each company's rank within it, is in the screener.