 "At ₹11 trn, India Inc capex pips govt capex in FY25; will the trend last?")
"Hallmark of FY25 corporate capex spending pattern is the broad-based nature of growth, wherein 157 corporates embarked on capex of more than $100 million, which is the highest number of companies since 2013," it said in a report dated June 11.
Source: Capitaline, I-Sec Research
At the peak of the capex cycle in 2012, 175 listed companies embarked on a minimum capex of $100 million, which was equal to ₹480 crore back then compared to ₹850 crore at present.
According to the brokerage's analysis, aggregate 'capex/depreciation' ratio has risen to ~2x from the cycle low of 1.3x. A capex to depreciation ratio suggests how much a company is investing in its long-term assets. A high ratio indicates a company is acquiring or upgrading long-term assets, suggesting it is in a growth and expansionary phase.
Who drove private capex in FY25?
The ICICI Securities report shows that corporates from utilities, energy (excluding Reliance Industries), industrials, cement, auto, and healthcare sectors were the top contributors towards private capex growth in FY25.
Telecom sector and RIL, as a conglomerate, meanwhile, reported muted capex growth last year. It, however, should be noted that while RIL saw a flattish capex growth, it cornered the biggest share in the capex pie in absolute terms.
"Public sector corporate capex growth (26 per cent Y-o-Y) outpaced private sector capex growth (18 per cent Y-o-Y) in FY25," the brokerage said.
India capex outlook in FY26
Analysts at ICICI Securities believe that the investment environment remains conducive for India Inc, on the domestic front, with fiscal and monetary policies aligned to support growth.
The government is steadfast on its fiscal glide path and expects to reduce the fiscal deficit further to 4.4 per cent of the gross domestic product (GDP), which will help to contain borrowing costs.
"Despite a falling fiscal deficit, the six-month government capex hit a record of ₹7.5 trillion on back-ended FY25 and front-ended FY26, even though the FY26 budget outlay was underwhelming at ₹11 trillion. Aggressive frontloading of capex opens up prospects for an upward revision to the budget estimate (BE) for FY26 government capex as it happened for FY25 revised estimate," the brokerage said.
The Reserve Bank of India (RBI), on its part, has been infusing liquidity into the system with periodic announcements of repo rate and/or cash reserve ratio (CRR) cut since December 2024.
"The global environment, triggered by geopolitics, is clearly raising uncertainty, but there are signs of some relative gains for India in terms of efforts to shift global supply chains away from China. It is now up to the corporate sector to ignite its animal spirit for the cycle to pick up," ICICI Securities said