India Inc sits on ₹5 trillion cash pile as firms hold back on capex amid uncertainty
A Mint analysis of cash holdings of 285 BSE-listed firms, excluding banking, financial services and insurance companies, showed a 12% year-on-year rise to ₹5.09 trillion in FY25.
Yet, new project announcements fell 5% in the same period, following a 3% contraction in FY24, according to the Centre for Monitoring Indian Economy's (CMIE) project-tracking database.
Companies are now sitting on cash and cash equivalents amounting to nearly 12% of their total assets. The rising number of firms with high cash ratios also points to subdued confidence in future business prospects. Between FY24 and FY25, more companies positioned themselves defensively, holding 25-50% of their assets in highly liquid form, the analysis showed.
With no broad-based demand revival since the pandemic, there's little incentive to reinvest profits. Rather, in the absence of sustained revenue growth, many firms have relied on cost optimization and price hikes to maintain profitability.
Still, flush with cash, many companies rewarded shareholders handsomely. A separate Mint analysis of 496 BSE 500 companies showed dividend payouts rose 11% on year in FY25 to ₹4.9 trillion—the highest in at least a decade, outpacing net profit growth of 9.5%. That suggests India Inc currently prefers sharing profits with investors over committing to long-term expansion.
Recovery ahead?
The big question now is when that investment impulse might return.
Many experts believe a pickup in investments may hinge on global clarity—particularly a long-awaited US-India trade deal. President Donald Trump's reciprocal tariff pause ends on 9 July, and firms appear to be holding off until there's more certainty on that front.
Asit Bhandarkar, senior equity fund manager at JM Financial Asset Management, notes that a lot of projects are in 'blue-print" mode and would be led by both organic and inorganic expansion plans. "The rising number of performing credit deals also indicate that money is being raised to improve existing capacities as well," he said.
On a more optimistic note, Pankaj Pandey, head of retail research at ICICI Securities, expects a sharper rebound in corporate investments in FY26, especially after private capex outpaced government spending last year. He expects energy, utilities, metals, automobile and industrial goods sectors to lead the capex cycle this year.
Adding to that, Raghav Narsalay, research lead and partner at PwC, pointed out that many firms now aspire to become global value chain leaders. 'So everyone wants to deploy cash wisely, even though money is getting cheaper to borrow."
Alternate avenues
Beyond dividends, some of India Inc.'s war chest may also be channelled into product innovation and service enhancements.
In order to drive topline growth from here on they are gearing up to expand their customer outreach, said Narsalay. 'Companies are now looking to innovate products, reinvent their business models and overall offer better value propositions to lure back customers. They are more willing to experiment with technology rather than buy lands or machinery immediately," he added.
Meanwhile, with fortified balance sheets and relatively low leverage, firms have ample room to borrow for acquisitions. Total debt level rose just 5% in FY25, following a slight contraction in FY24, the analysis showed.
'Since raw material prices are not at peak levels and there is not much stress in balance sheets, they can also borrow for inorganic expansions," noted Pandey from ICICI Securities.
Strong cash flows and high profitability, coupled with cooling valuations and improved liquidity, have triggered a wave of consolidation in several industries. Cement, cables, paints and healthcare have seen a particular pickup in acquisition activity, said JM Financial's Bhandarkar.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
Business Standard
a few seconds ago
- Business Standard
India among fastest growing economies: JSW chairman Sajjan Jindal
JSW Group chairman Sajjan Jindal on Thursday countered US President Donald Trump's recent remarks on India, saying India is one of the largest and fastest growing economies in the world. Speaking at the listing ceremony of JSW Cement at the NSE here, Jindal said India is the fastest growing large economy and has a great future ahead, days after US President Donald Trump's remark of India being a dead economy. "We are going to see a great future for India, because India is growing, it's one of the largest, fastest growing large economies in the world. Whatever Trump may say, that doesn't matter. We are the fastest growing large economy in the world," Jindal said. Amid the trade policy negotiations, Trump had called India as a "dead economy" while expressing disappointment with New Delhi's posturing to continue buying cheap oil from Russia. "I don't care what India does with Russia. They can take their dead economies down together," Trump had reportedly said. Stating that JSW Cement will grow fast as accelerated growth is in the DNA of the Group, he said, "we can't be conservative, we have to be aggressive and that's what India requires. India needs aggressive companies, India needs growth." Meanwhile, shares of JSW Cement Ltd listed with a premium of over 4 per cent against the issue price of Rs 147 on Thursday. The company's stock opened at Rs 153, up 4 per cent from the issue price on the BSE. Later, it jumped 5.23 per cent to Rs 154.70. At the NSE, it listed at Rs 153.50, a premium of 4.42 per cent. The company's market valuation stood at Rs 20,914.02 crore. The capital markets are not just about raising funds, it's about winning the trust of the investors, Jindal said and added that "in the long run, you don't need to take a big jump, but small steps and the investors are always with you." JSW Cement Managing Director Parth Jindal said that he was aiming to take the company to the top two in the industry. "... I have to dream to be in the top two and we all will dream to be in the top two and to build this company," he said. "We have just begun and I hope that we can create value for all our minority shareholders and take this company to its rightful place and be a big part of the future growth story of the JSW group," he said. He said that at present a lot of JSW group companies have the vision to go public, adding that," Now, I'm fully trained, fully ready and geared up to take all of you public as well.
&w=3840&q=100)
Business Standard
a few seconds ago
- Business Standard
Rishabh Instruments share zooms 20% in weak broader market post Q1 results
Rishabh Instruments share price today: Rishabh Instruments shares were locked in 20 per cent upper circuit at ₹357.70 on the BSE in Thursday's intra-day trade amid heavy volumes in otherwise a weak broader market. The average trading volumes on the smallcap stock counter jumped multiple fold. Till 1:22 PM, a combined 2.96 million shares changed hands on the NSE and BSE. There were pending buy orders for a combined 500,000 shares, the exchange data showed. The stock had hit a 52-week high of ₹399.95 on October 1, 2024. In comparison, the BSE Smallcap index was down 0.52 per cent at 51,826. Rishabh Instruments Q1 results In the April to June 2025 quarter (Q1FY26), Rishab Instruments reported a six-fold jump in consolidated profit after tax at ₹19.62 crore, compared to ₹3.21 crore in Q1FY25. Revenue from operations remained flat at ₹190.32 crore, against ₹169.35 crore in a year ago quarter. Rishabh Instruments outlook Looking ahead, Rishabh Instruments said the company is focused on scaling core businesses through sharper commercial execution, product differentiation, and operational agility. The company's target is to generate 10-12 per cent incremental revenue from new products over the next two years. Instrumentation, EMS and automation will continue to receive strategic capital, while the solar inverter vertical is expected to scale materially after certification. In die casting, the company aims to achieve Ebitda positivity by 2025-26. Accordingly the management said the company is shifting the portfolio from automotive to industrial customers, where lead times, margins, and product control are structurally more attractive. Rishabh's core offerings, electrical automation solutions, portable instruments, and metering and control devices, continued to witness healthy demand across both domestic and international markets. The Company experienced strong momentum from industrial automation projects, energy efficiency initiatives, and the growing demand for clean energy solutions. Additionally, domestic operations in India remained strong, supported by steady demand from OEMs and project orders. About Rishabh Instruments Rishabh Instruments operates through five vertically integrated manufacturing units across India, Poland, and China, along with two modification centres in the US and the UK. In 2024-25, the Company further expanded its global presence with the acquisition of MICROSYS, a Czech Republic based Company specialising in SCADA software for industrial process automation. Its offerings span solutions across key verticals like electrical automation, metering, control and protection devices, portable test and measuring instruments, aluminium HPDC, and solar inverters. The company leads globally in analogue panel meters and low voltage current transformers. In India, it dominates the split-core current transformer segment. Its subsidiary, Lumel, ranks among the top brands for metres and controllers in Poland and operates under two distinct business divisions: die-casting solutions for automotive and non-automotive industries, and electrical and electronic products.
&w=3840&q=100)
Business Standard
a few seconds ago
- Business Standard
India's forex to rise despite RBI support, swap maturity, say economists
India's foreign exchange reserves are expected to have risen in the week through August 8, according to economists calculations based on the Reserve Bank of India's weekly reserve money release. A $5 billion dollar/rupee swap by the RBI matured that week, with bankers saying the central bank delivered the swap, a move that is a drain on reserves. Further, the RBI intervened in both the onshore spot and non-deliverable forward markets that week to prevent the rupee from slipping past its all-time low of 87.95 after US President Donald Trump imposed additional tariffs on Indian goods over the country's purchase of Russian oil. This drain on reserves was balanced out by revaluation effects, economists said. "The rise in FX reserves was fuelled by a revaluation boost of $9.8 billion, reflecting higher gold prices and a weaker dollar," said Gaura Sen Gupta, economist at IDFC First Bank. She estimated that India's reserves rose by more than $4 billion during the week. The official figures will be released on Friday. When RBI sells dollar in the spot market to support the rupee it directly reduces FX reserves, while NDF interventions influence offshore sentiment without an immediate reserves impact. The net dollar selling by RBI in that week was $5.6 billion, which includes maturity of $5 billion swap, Sen Gupta said, which she noted implied spot intervention in the week was less and that the RBI would have relied on NDF. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
