Rs 11 lakh crore corporate capex beats govt capex; RIL top contributor: Report

Economic Times

a day ago

Corporate capex by listed non-financial companies jumped 20% YoY to over Rs 11 lakh crore in FY25, exceeding the government's spending and reflecting broad-based growth, per ICICI Securities. While Reliance Industries led in scale despite flat growth, capex in telecom and RIL remained muted, underscoring the diversified nature of corporate investments this fiscal.
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Corporate capex by listed non-financial companies surged 20% year-on-year to cross Rs 11 lakh crore in FY25, surpassing the central government's Rs 10.5 lakh crore spend and aligning with the NSO's latest corporate sector capex survey, according to a report by domestic brokerage firm ICICI Securities.Interestingly, Mukesh Ambani-owned Reliance Industries Ltd (RIL) led this surge despite reporting flat year-on-year growth, highlighting that the capex momentum was broad-based rather than concentrated.Capex growth remained muted in capital-intensive sectors such as telecom and RIL (the latter treated as a separate category due to the diversity and scale of its capex).ICICI Securities also noted that other major contributors to FY25's capex growth included companies in utilities, energy (excluding RIL), industrials, cement, auto, and healthcare sectors.'The hallmark of FY25's corporate capex spending pattern is its broad-based nature, with 157 corporates committing to capex of over USD 100 million—the highest number since 2013,' ICICI Securities noted.At the peak of the capex cycle in 2012, 175 listed companies had each committed to at least USD 100 million in capital expenditure (equivalent to Rs 4.8 billion then, compared to Rs 8.5 billion now). The overall capex-to-depreciation ratio has risen to around 2x, up from a low of 1.3x, indicating a renewed increase in discretionary capex spending.One major reason for sluggish credit growth despite the rise in capex in recent years has been the strong cash flow from operations (CFO) generated by listed companies, which peaked at over 2x capex in FY21, according to ICICI Securities.However, even with a robust CFO of Rs 16 trillion in FY25, the CFO-to-capex ratio declined to 1.5x, as capex growth outpaced cash generation—signaling a potential pickup in corporate loan demand going forward.Also read: How 50 Bajaj Finance shares will turn into 500 by June 27. Explained Stating that fiscal and monetary policy conditions appear conducive for a pickup in the corporate capex cycle, domestic brokerage firm ICICI Securities noted that the government's fiscal deficit is expected to ease to 4.4% of GDP, thereby reducing pressure on credit markets and creating space for private capex funding. Despite a lower overall outlay, government capex touched Rs 7.5 trillion between late FY25 and early FY26, with frontloading likely to push FY26 estimates even higher.Additionally, monetary policy has remained growth-oriented since December 2024, with 50 basis points in CRR cuts already implemented and another 100 basis points expected. So far this year, 100 basis points in repo rate cuts have also been announced.Commenting on the outlook, ICICI Securities said the domestic policy environment has gone into overdrive to revive capex, with strong support from both fiscal and monetary fronts. The onus now lies on the corporate sector to "ignite its animal spirits" and drive the next leg of the capex cycle.While the global environment remains uncertain due to geopolitical tensions, there are signs that India may benefit from shifting global supply chains away from China.Also read: Asian Paints shares see Rs 7,700 crore block deal, stock up over 2%