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Mint
2 days ago
- Business
- Mint
To change the world, India Inc must stop hoarding cash and take more risks
Gift this article India Inc is sitting on an unprecedented mountain of cash. A Mint analysis of 285 listed entities (excluding banking, finance and insurance companies, which have some statutory cash requirements) showed their cash and cash equivalents grew to ₹ 5.09 trillion in FY25, up 12% year-on-year. To put it in perspective, that's nearly thrice the country's total outlay for capital expenditure on defence services. India Inc is sitting on an unprecedented mountain of cash. A Mint analysis of 285 listed entities (excluding banking, finance and insurance companies, which have some statutory cash requirements) showed their cash and cash equivalents grew to ₹ 5.09 trillion in FY25, up 12% year-on-year. To put it in perspective, that's nearly thrice the country's total outlay for capital expenditure on defence services. What's more, this tendency to hoard cash isn't new. According to the analysis, the ratio of cash to total assets for these 285 companies grew from 8.4% in FY19 to a high of 32.1% in the covid year of FY21 (understandably so) before dropping. In FY25 it was 11.8%, still substantially higher than the pre-covid level of 8.4%, logged in FY19. The bigger they are, the harder they hoard If we expand the analysis to the 500 companies that form the Nifty 500 Index, the picture becomes even more stark. These 500 companies are (with a few exceptions) arguably India's largest, most valuable, successful, globally integrated and globally competitive businesses. They are all also highly profitable. And they are all ploughing those profits largely into cash reserves. For the Nifty 500 companies, cash and cash equivalent reserves hit ₹ 17.5 trillion in FY25, up 17% year-on-year, easily surpassing the 12% increase in FY24. What's more, India's biggest companies are sitting on the most cash. In FY25, the combined cash and cash equivalent reserves of just five companies – Reliance Industries, Larsen & Toubro, Tata Motors, Infosys, Wipro and Tata Consultancy Services stood at ₹ 3.38 trillion. Reliance alone accounted for two-thirds of this, with a cash pile of ₹ 2.25 trillion. This mountain of cash is due to extraordinary growth in profits as measures to rationalise costs and operations put in place after the pandemic have started to bear fruit. According to NSE's Corporate Performance Review for FY25, just the top 50 companies, represented by the Nifty 50 Index, recorded profits of ₹ 8.4 trillion in FY25, marking 5.5% growth over the previous year. Cash for cash's sake But this money is not being used to build capacity, create or grow into new markets, acquire businesses, invest in research & development, or even reward shareholders. It's simply sitting on companies' balance sheets. According to a report by Nuvama Research, India Inc's capex growth slowed to around 6-8% in FY25 from 20% in FY24. Automobiles and tractors maker Mahindra & Mahindra grew its cash reserves by 66% in FY25 but added only 12% to fixed assets; L&T grew cash reserves by 32% in the same period but added only 0.2% to fixed assets; Infosys added 32% to cash but just 5% to fixed assets; and so on. Actually, all this should not come as a great surprise. India Inc has historically been risk-averse. Other than IT services firms, Indian companies have largely chosen the relative security of the domestic market over bold international bets. Even IT services has played it safe, having failed to make the shift from offshore services to products. Back in 2015, Infosys was one of a handful of companies that donated to OpenAI, whose ChatGPT would just a few years later turn the technology world on its head. That was under the leadership of its then CEO Vishal Sikka. But Sikka soon stepped down owing to differences with Infosys's powerful founders led by NR Narayana Murthy, and that early and prescient bet never paid off. Instead, Microsoft stepped in with a $1-billion investment in the now for-profit OpenAI. Infosys has been left playing catch-up, partnering with Microsoft to develop AI solutions, as well as the leader in AI hardware, Nvidia. Risk it for the biscuit In one of P.G. Wodehouse's classic novels, his immortal characters – the amiable aristocrat Bertie Wooster and his 'gentleman's personal gentleman' Jeeves – are forced to become bookies for a while. Jeeves is, in particular, extremely successful at this, enticing punters with his pitch: 'You can't accumulate if you don't speculate!" Speculation – or risk-taking – is fundamental to business. Risk and reward are intrinsically linked; the greater the risk, the greater the reward. An extreme example of risk-taking was when FedEx promoter Fred Smith faced closure after failing to secure a bank loan. He went to Las Vegas with $5,000 of the company's remaining cash and won enough by gambling to keep it going. When he died last month, Smith was personally worth more than $6 billion. But business risk is not like outright gambling. It is the ability to take a calculated risk where others failed to see opportunity. Apple had a successful computer business but bet big on smartphones, and is now one of the world's most valuable and influential companies. In 2006, when video streaming was in its infancy, Google acquired YouTube for a then-substantial $1.65 billion. In 2024, YouTube alone generated more than $36 billion in revenue for Alphabet. There are no similar bold bets in India Inc's history, other than perhaps Tata's Corus and Jaguar-Land Rover buys in 2007 and 2008. There is no true Indian multinational. There is no Indian company with a genuinely global brand. What they have instead is heaps of cash. Topics You May Be Interested In
Mint
17-06-2025
- Business
- Mint
Iran-Israel war: Are small-cap stocks most exposed to Middle East tensions amid high valuations?
Indian stock market: Geopolitical tensions are once again flaring up in the Middle East, as hostilities between Iran and Israel continue for the fifth consecutive day, making investor sentiment jittery towards riskier assets. Global markets have been on edge, with the conflict adding fresh strain to an already fragile global economy, one that is still grappling with the effects of trade tensions and the ongoing Russia–Ukraine war. For the Indian stock market, the Iran–Israel conflict has added to existing concerns around stretched valuations. Although India does not have significant trade dependence on either country, the tensions have triggered a sharp spike in crude oil prices, dampening market sentiment. While local equities initially reacted negatively to the developments, they later rebounded sharply, with strong resilience in large-cap stocks providing much-needed support to frontline indices, helping them trade higher despite global concerns. During periods of heightened market volatility, stocks with rich valuations tend to correct more than those with reasonable valuations. Although the overall market appears stretched following a sharp rally over the last three months, analysts believe small-cap stocks may face further pain if geopolitical tensions persist, as they are more richly valued compared to large-cap counterparts. Vinod Nair, Head of Research at Geojit Financial Services, said, 'Despite ongoing geopolitical tensions between Israel and Iran, the market moved higher, supported by gains in large-cap stocks, as investors maintained their focus on long-term fundamentals during volatile times. Geopolitical developments in the Middle East are likely to influence near-term market sentiment, with any signs of de-escalation being closely monitored. Small-cap stocks are expected to underperform in the short term, given their elevated valuations and lack of immediate triggers.' Recent data also indicates a shift in retail investor preference towards large-cap stocks, with ownership in mid- and small-cap counters falling to a nine-quarter low amid a broader market sell-off during the March 2025 quarter, according to the NSE report titled 'India Ownership Tracker.' Meanwhile, allocation towards large caps has risen, reflecting a growing inclination for the relative safety of blue-chip stocks amid market turbulence. According to the domestic brokerage firm Kotak Institutional Equities, small caps witnessed the largest cuts on their FY2026 EPS estimates. The brokerage notes that continued weakness in parts of the economy has resulted in continued downgrades to consensus earnings across market caps for FY2026E/27E. However, small caps lead the EPS cuts with a 6% cut in their FY2026 EPS estimates versus 2% for large caps and 3% for mid-caps. The downward revisions have been broad-based, with consumer-facing businesses seeing larger cuts. The same can be seen in earnings cuts of individual stocks of the Nifty 500 Index, with 70% of stocks seeing downgrades versus 30% of stocks seeing upgrades over April-June 2025, noted the brokerage. The Nifty SmallCap 100 is trading at a 1-year forward price-to-earnings (P/E) multiple of 27.2x, significantly higher than its long-term average and much closer to the Nifty MidCap 100's P/E of 28.3x. The spike in Nifty small-cap-100 forward P/E valuation to near mid-caps and at a premium to Nifty-50 This is unusual, as small-cap stocks typically trade at a discount to mid-caps due to their higher risk profile and lower liquidity. The sharp rise in valuations places the index near its historical peaks, levels that were last seen during previous periods of overheated sentiment, such as mid-2021 and pre-2018, as per the analysis done by domestic brokerage firm InCred Equities. In contrast, the Nifty 50 is trading at a more reasonable 20.7x forward P/E. The narrowing gap between small- and mid-cap valuations is causing discomfort among investors, particularly in an environment of persistent global uncertainties and uneven earnings visibility. Without a strong pickup in earnings growth, such elevated valuations leave little room for upside and increase the risk of a valuation-driven correction. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Time of India
09-06-2025
- Business
- Time of India
Equity, debt or gold, which asset class has delivered highest returns in last 11 years? Here's an annual performance tracker
Gold proves crucial in portfolio performance ranking In this TrendMap, we have considered the weighted annual returns for comparison. The equal weighted portfolio of equity, debt, and gold generated the highest returns in 2025 year-to-date. Moreover, such a portfolio delivered double-digit returns in six of the past 11 years. In contrast, the returns generated by the portfolio with a strong debt component has seen high volatility since 2020. After topping the charts in 2023 and 2024, the portfolio with a strong equity component skidded down in 2025 year-to-date amid high turbulence due to global macroeconomic uncertainties and valuation concerns. Gold has emerged as a crucial asset. Portfolios with zero gold exposure remained in the lowest two ranks in six out of the last 11 years. Looking at the risk-reward ratio, of the seven defined portfolios based on the average returns and standard deviation over the last 11 years, the portfolio with the higher debt component (debt 60%) has the most optimal risk-to-reward ratio, followed by the equal weighted portfolio. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 모기 잡지말고 켜두면 다 죽어! 앱스토리몰 더 알아보기 Undo Comparatively, the portfolio with the highest equity component has the most sub-optimal risk-to-reward ratio. Source: ACE MF. *2025 data is YTD based on 30 May 2025 closing values. Other years' returns are calculated between the first and the last trading day closing values. WAR is the weighted average return (or portfolio Live Events return) of the given investment allocation. Benchmarks used: Equity: Nifty 500 Index, Debt: Crisil Composite Bond Index, Gold: Nippon India ETF Gold BeES.
India Gazette
05-06-2025
- Business
- India Gazette
National Stock Exchange of India surpasses 22 crore investor accounts
New Delhi [India], June 5 (ANI): The National Stock Exchange of India (NSE) has achieved a total number of investor accounts, or Unique Client Codes (UCCs), exceeding 22 crore (220 million) in April 2025. This marks a rapid increase, coming just six months after crossing the 20-crore mark in October 2024. The number of unique registered investors separately reached 11.3 crore as of March 31, 2025, having surpassed 11 crore on January 20, 2025. It's important to note that an investor may hold multiple accounts with different brokers, leading to multiple client codes. State wise, Maharashtra leads the nation with the highest number of investor accounts at 3.8 crore, followed by Uttar Pradesh (2.4 crore), Gujarat (1.9 crore), and both Rajasthan and West Bengal with approximately 1.3 crore each. These top five states collectively account for nearly 49% of the total accounts, with the top ten states contributing roughly three-fourths of the overall count. 'India's investor base continues to expand rapidly, with over 2 crore new accounts added in just six months--a clear reflection of strong investor confidence in India's growth trajectory despite global economic headwinds,' said Sriram Krishnan, Chief Business Development Officer, NSE. Adding, 'this surge has been driven by accelerated digital transformation and the increasing adoption of mobile trading, which have made capital markets more accessible to investors across tier 2, 3, and 4 cities. The growth also highlights the success of focused initiatives to deepen retail participation, including widespread financial literacy programs and streamlined KYC processes.' The benchmark Nifty 50 Index has delivered a 22% annualized return over the past five years, while the Nifty 500 Index has seen a 25% annualized return, demonstrating significant wealth creation for investors. Additionally, NSE's Investor Protection Fund (IPF) saw a substantial increase of over 23% year-on-year, reaching Rs 2,459 crore as of March 31, 2025. (ANI)
Economic Times
26-05-2025
- Business
- Economic Times
What does Nifty's surge above 200-DMA mean for investors?
Agencies Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: The recent rebound in the stock market has pushed the Nifty above its 200-Day Moving Average (DMA)-a long-term trend indicator-signalling a bullish undertone among blue chips. Beneath the surface, the optimistic mood may not be as widespread, but it's more sanguine than it was a couple of months the top 500 stocks, 226 are trading above 200-day moving averages, according to Axis Securities . When a stock or an index is above its 200 DMA, it's said to be in a long-term uptrend and vice versa. It's the average price of a stock or index over the last 200 trading days, which is close to a full trading year, helping investors get a better view of the price trends over a longer period. Nifty's 200-DMA is at 24,631, about 0.9% below Friday's closing level of 24, the stocks that are above 200-DMAs are still less than 50% in Nifty 500 index, it's higher compared to 95 in March and 45 in February, a sign of gradually improving investor confidence with a tinge of caution."The investor sentiment has improved significantly since February-March as the broader market has witnessed renewed buying interest, but the recovery is gradual as investors remain selective buyers focusing on companies that delivered good results," said Ruchit Jain, vice president- head technical research at Motilal Oswal Financial Services Of the stocks trading above 200- DMA, 62 are trading 10-20% away from the average price and 15 are at a 20-30% distance, while 138 are as much as 10% away. 11 stocks are trading 30% above their 200-DMA, according to Axis. Similarly, 162 stocks are up to 10% below the 200- DMA, 69 are 10-20% below the level, and 25 are over 20% bullish conditions, fewer than 50% of the top 500 stocks below the 200-DMA would not be a reason to celebrate, but given the lingering concerns over the economic fallout of tariffs and uncertainty over corporate earnings, optimists would consider this number acceptable.'Despite the muted fourth quarter earnings, a greater number of stocks out of the NSE 500 universe are trading above the 200-DMA compared to February and March, indicating investor confidence is returning on the street,' said Rajesh Palviya, head of technical and derivatives, Axis Nifty 500 Index slumped by nearly 8% in February but bounced back in March and April, gaining 7.3% and 3.2%, respectively. The Nifty Midcap 150 and Smallcap 250 indices have risen 17.6% and 20.2%, respectively, from their lows this year on February 28 and March 3.'Mid-caps moved up when domestic investors bought, and large-cap names performed well when foreign investors began purchasing after a period of aggressive sell-off, so there has been rotation among the stocks,' said Jain.
