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Informist, Tuesday, Jun. 10, 2025

 

HYDERABAD - Corporate India is gearing up for a huge investment cycle, with capital expenditure likely to double over the next five years, according to a report by research firm S&P Global Ratings. Indian companies are expected to spend $800 billion-$850 billion by 2030, driven by strong demand, favourable government policies, and a positive economic outlook, the report said.

 

"Indian companies are well positioned for a growth run," the report said quoting Neel Gopalakrishnan, credit analyst at S&P Global Ratings. "Barring execution missteps or adverse macroeconomic shifts, these investments should help expand scale without significantly raising debt."

 

The report is based on an analysis of capital spending trends of the top 100 Indian companies by market capitalisation, as well as some unlisted companies. The study was conducted by Crisil Intelligence, a subsidiary of S&P Global Ratings.

 

Most of the funding is expected to come from strong operating cash flows, reflecting healthier balance sheets and meaningful deleveraging across sectors. While the power sector carries some risk due to its high capital needs, S&P expects credit profiles across Indian companies to remain resilient.

 

Power sector, particularly renewable energy, and aviation are set to be among the largest beneficiaries of this investment wave, S&P Global said. Spending on airports alone could double or triple over the period. Traditional sectors like steel, cement, oil and gas, telecom, and automobiles are expected to see steady growth in capex, in the range of 30-40%, the report said.

 

"The expansion is not without risks, particularly for the power sector, which has the highest capital expenditure needs," the report said. Leverage in sectors such as steel and cement depends heavily on product prices and input costs, both of which have seen increased volatility in recent years, S&P Global said. For most other sectors, any operational setbacks could reverse balance sheet health but are more manageable.

 

"Healthy starting points and strong operating cash flows will keep credit strains in check. Companies across sectors have deleveraged meaningfully over the past three to four years. Earnings and operating cash flow across sectors are about 60% higher or double the levels from five years back and will grow further," the report said.

 

Indian companies could also benefit from global companies trying to diversify their sourcing such as electronics, including semiconductors, medical devices, and automobile components sectors, which could tap the opportunity more easily. "The investments and resultant growth are, however, likely to be more gradual and represent a small proportion of the overall corporate capital expenditure," the report said.  End  

 

US$1 = INR 85.55

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Narayana Krishna

Edited by Vandana Hingorani

 

 

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