Big Indian companies are steping up investments following the post pandemic
Published On: Friday, October 22, 2021 | By: Team KnowMyStock
With healthy cash reserves and aided by stronger balance sheets post-Covid, Indian companies are looking to step up their capital expenditure and investment plans. Industry captains and analysts say a mix of factors such as accommodative monetary policy and lower interest rates, reduced corporate tax rates and government incentives such as Production-Linked Incentive (PLI) scheme, global liquidity, and upward commodities cycle are fueling optimism among companies. "Corporates are sitting on cash as profitability has picked up in the post-pandemic period. They are looking to invest in order to capture available opportunities of increased government spending, divestment, consumer demand revival, and export market. PLI scheme and revival of real estate and housing will make a positive impact on the investment cycle. We believe sectors like IT pharma steel, sugar, cement, real estate, and infrastructure will take lead on investment" says an economic expert.
Executives of big business groups confirmed that investments were on the rise following the abatement of the pandemic. A Tata official said group companies were investing in several new projects across sectors such in automobile, power, steel as well as betting new sunrise sectors.
Listed Indian corporates reported record reserves and surplus of Rs 66.04 lakh crore as of March 31, 2021, up from Rs 56.48 lakh crore as of March 31, 2020. The aggregate value of investments of about 4000 listed companies was at an all-time high of Rs 86.78 lakh crore in FY21 compared to Rs 67.55 lakh crores a year ago. These companies hold nearly Rs 26.68 lakh crore in cash and bank balance, again a record figure, and posted more than Rs 6.5 lakh crore profits in FY21.
According to brokerages, Indian steel cos plan to spend nearly 2.5 times on Capex over FY22-24 vs. the previous three years. According to Jefferies estimates, a combination of PLI (production linked incentive) scheme-related Capex and data centers can add $10-15 billion to annual Capex spending. Renewable power is the other big area where Capex is expected to be strong, according to analysts.
The Indian real estate sector has already witnessed a higher inflow of investment across institutional, private equity, and FDI routes in recent quarters.
Tags: Big Indian companies are steping up investments healthy cash reserves post pandemic PLI scheme
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