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Mint
4 days ago
- Business
- Mint
India Inc sits on ₹5 trillion cash pile as firms hold back on capex amid uncertainty
Amid a patchy demand recovery and lingering global uncertainty, India Inc. continued to hoard cash in the last fiscal year, choosing financial buffers over fresh investments. Despite rising profits and healthy balance sheets, companies showed little urgency to deploy capital, preferring to return more to shareholders instead. 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.
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Business Standard
6 days ago
- Business
- Business Standard
Win some, lose some: the surprising post-pandemic changes in wage growth
The more educated have had slower growth but they are the highest paid in the country Sachin P Mampatta Mumbai Listen to This Article Wages in India are slowly picking up from their pandemic dip but remain in single-digit territory. Wages have grown at 8.7 per cent on an annualised basis since 2018-19, shows data from the Centre for Monitoring Indian Economy (CMIE) based on its Consumer Pyramids Household Survey. This is lower than the 12 per cent growth in 2018-19 and 31 per cent growth seen in 2017-18, though recovery from demonetisation and associated disruptions may have played a role in the latter figure. The latest growth figure is despite a nearly 19 per cent year-on-year growth in 2024-25, the fastest in seven
Mint
02-07-2025
- Business
- Mint
June turns quieter as animal spirits fade
Indian companies began 2025-26 on a subdued note, with investment appetite for new projects sinking to one of the lowest in nearly five years. While the June quarter is often a quieter period, new government capital expenditure (capex) announcements were the lowest this year in at least a decade. According to data from the Centre for Monitoring Indian Economy's (CMIE) project-tracking database, new projects worth ₹4.1 trillion were announced across the country during the first quarter of the current fiscal. This marks one of the lowest investment proposals since the first three quarters of 2020-21 (amid pandemic lockdowns) and the first quarter of 2024-25 (during general elections). Also Read: GVA data haze: Has India been overcounting the output of its informal sector? 'There is usually a seasonal dip observed in project announcements in the June quarter after the ramp-up in March. But this year the decline was unusually sharp," said Aditi Nayar, chief economist at Icra Ltd. A sharp decline in government projects, accounting for only 13% of overall new investments, primarily drove the slowdown in the recently concluded June quarter. Government investments totalled a mere ₹0.5 trillion, marking the lowest for a June quarter in at least a decade. This figure was even lower than public sector projects announced during April-June 2020, when the country had undergone an unprecedented lockdown due to the Covid-19 pandemic. According to Icra's Nayar, the notable decline in Q1FY26's new projects should be read carefully, as it follows the unusual spike in Q4FY25 of worth ₹6.8 trillion, which was more than double the year-ago levels and also exceeded the amounts seen in the rest of 2024-25 together. Also Read: Public capex is doing the heavy lifting, and the figures aim at a decade's high 'The chunking up of such announcements in Q4FY25 is likely to have led to the lull in Q1FY26," she added. Private sector investments, at ₹3.5 trillion, though accounting for the bulk of new project announcements in Q1FY26, still hit a four-quarter low. Among the 10 largest new project announcements in the June quarter—which collectively represented approximately 67% of total investments—only one was government-funded: the Chandrapura Ultra Supercritical Power Plant Expansion Project worth ₹0.2 trillion in Giridih, Jharkhand. Vedanta's Dhenkalan Aluminium Smelter Project led new investments in Q1FY26 at ₹1.3 trillion, followed by InterGlobe's purchase of 30 more Airbus A350-900 aircraft valued at ₹0.4 trillion. Sector-wise analysis reveals that manufacturing primarily dominated new investments in the quarter, accounting for more than half of all announcements, yet investments in this segment remained at a near two-year low. Also Read: Sixteenth Finance Commission likely to keep states' tax share unchanged amid Centre's defence, capex needs Despite the subdued pace of new investment announcements in Q1FY26, project completions showed relative strength, with projects worth ₹2 trillion completed during the quarter, marginally lower than projects worth ₹2.4 trillion completed in the previous quarter.
Time of India
02-07-2025
- Business
- Time of India
India's Growth Engine Loses Steam in June, may Get Back on Track Soon
The Indian economy hit a soft patch in June with several high-frequency indicators such as goods and services tax (GST), UPI transactions, diesel consumption and car sales showing muted growth or even a contraction from a year earlier. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The Indian economy hit a soft patch in June with several high-frequency indicators such as goods and services tax (GST), UPI transactions, diesel consumption and car sales showing muted growth or even a contraction from a year earlier. On the positive side, India's manufacturing activity strengthened and petrol consumption increased at a fast said this was a transitory moderation and growth is expected to gain momentum again, helped by a likely good monsoon, easing inflation and monetary relaxation by the RBI. The central bank has forecast growth at 6.7% in FY26. GST collections expanded at the slowest in the last 50 months at 6.2% in June, car sales dropped 6% in the month from a year ago and the UPI witnessed a slight decline in both transaction volume and value in June from May. 'Around 6% growth in GST collections, coupled with less than 4% growth in advance tax collection for first quarter of FY26 does indicate softening of demand and cautious outlook,' said Pratik Jain, partner, Price Waterhouse & Co reported Tuesday that sales of air conditioners and refrigerators dropped sharply in the April-June quarter in the wake of milder-than-expected summer temperatures. Data released on Monday showed India's industrial output growth slowed to a nine-month low of 1.2% in May, due to weak manufacturing growth along with contraction in mining and electricity sector companies announced new projects worth Rs 3.5 lakh crore in the quarter ended June, up from Rs 1.4 lakh crore in the same quarter last year, according to data from the Centre for Monitoring Indian Economy (CMIE). However, this was the slowest in four manufacturing activity rose to a 14-month high of 58.4 in June, driven by strong growth in output and new orders. The HSBC Purchasing Managers Index (PMI), compiled by S&P Global, was 57.6 in May and 58.3 in June UPI platform processed 18.40 billion transactions during the month, down from 18.68 billion in May. Transaction value dipped to ₹24.04 lakh crore from ₹25.14 lakh crore in May, according to data released by the National Payments Corporation of India (NPCI) on July consumption dipped 1.5% from a year earlier to 150.04 billion units in expect growth to pick up going ahead.'Despite a potential second-half slowdown, India is poised to grow close to trend, backed by favourable weather conditions, 0.6% GDP worth of policy support for urban consumers, and increased public capex,' said Anubhuti Sahay, senior economist, Standard Chartered the data indicates a mixed picture, the Indian economy is likely to have grown by 6.8% in the June quarter as the base is favourable, she said.
Economic Times
01-07-2025
- Business
- Economic Times
Odisha leads in Q1 private capex
New private sector project announcements in India hit a four-quarter low in the three months ending June, as per CMIE data. Despite this dip in project numbers, total investments more than doubled year-on-year, reaching ₹3.5 lakh crore, with Odisha leading the way. Experts attribute the moderation to tariff uncertainties and subdued domestic demand, impacting capacity expansion plans. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads New Delhi: New project announcements by private sector companies fell to a four-quarter low in the three months ended June, showed data from the Centre for Monitoring Indian Economy (CMIE). Total investments in these projects at ₹3.5 lakh crore, however, more than doubled from Rs 1.4 lakh crore a year earlier, the data states dominated the investments, accounting for 85.7% of the newly-announced projects. Odisha led at Rs 1.4 lakh crore, followed by Andhra Pradesh (₹47,110.7 crore) and Haryana (₹45,934 crore).Experts attributed moderation in investments to prevailing uncertainty around tariffs, and muted domestic demand, both weighing on capacity expansion plans."The unprecedented economic uncertainty due to tariffs and geopolitical reasons appear to have been behind the decline in new project announcements," said Paras Jasrai, associate director at India Ratings and Research (Ind-Ra).India and the US are negotiating a trade agreement, which is expected to be finalised before July Gupta, principal economist at HDFC Bank , noted that a broader and sustainable recovery in domestic consumer demand is essential for driving private capex. "Clarity on external demand is also crucial for sectors with significant export exposure."The drop in new project announcements aligns with a government survey on private sector capex investment intentions released in fiscal year, private capex is expected to reach ₹4.9 lakh crore, declining from ₹6.6 lakh crore in FY25, according to the survey released by the statistics ministry."Private capex is expected to remain subdued going by the survey, though a pick up could occur in the second half of this fiscal year, as domestic demand strengthens from August with the start of the festive season," said Madan Sabnavis, chief economist at Bank of Baroda Government capex rose 54% to ₹2.2 lakh crore in April-May, official data released Monday 324, new private projects announced in the first quarter of FY26 were the lowest since Q1FY23, according to an ET analysis. CMIE tracks projects with capex of Rs 1 crore or sectors, metals and metal products saw the highest value of new project announcements at ₹1.4 lakh crore, followed by electricity (₹63,207.3 crore) and transport services (₹44,893.5 crore).
