Top 100 firms’ FY22 capex spends rise to Rs 4.65 trn – CASINOIN -Sports betting at the casinoin betting company,casinoin online betting, casinoin bookmaker line, casinoin bookmaker bonuses, casinoin bookmaker, casinoin bookmaker, casinoin sports betting, casinoin bookmaker, casinoin bookmaker,

On the back of favourable policies and market conditions, capital expenditure spends of top 100 companies (excluding banks and financials) in the Nifty200 index, rose to Rs 4.65 trillion in the financial year 2022, the highest in the past decade, according to data sourced from Bloomberg and Capitaline. This is also a 14% rise from Rs 4.08 trillion in FY21, after two years of successive decline posted by the same universe.

Reliance Industries (RIL) topped the charts with a spent of Rs 1 trillion, followed by Oil & Natural Gas Corp (Rs 44,526 crore), Bharti Airtel (Rs 26,541 crore), NTPC (Rs 24,444 crore) and Indian Oil Corp (Rs 23,037 crore) among others. The largest company by revenue, profit and market capitalisation — RIL — has been deploying over a trillion rupees as capex for the last two years.

The decadal high capex of these companies is due to deferred capex plans from fiscal 2021, healthy balance sheets post deleveraging across corporates, conducive government support through policy measures such as the Production-Linked Incentive (PLI) schemes, reduced corporate tax rates and accommodative monetary policies and lower interest rates among others, Hetal Gandhi, director at Crisil Research, said.

Commodities upcycle, which has benefitted metal and cement players, rising merchandise exports, supply chain diversification (China + 1 strategy) and rising emphasis on environmental, social and governance (ESG) compliance that triggered green capex were other catalysts, Gandhi added.

Among the top corporates, the capex spend of Grasim Industries, Tata Power and UltraTech Cement has more than doubled in FY22. While Vedanta spent Rs 10,630 crore in FY22, its highest spent in the last seven years, Tata Steel spent 51% higher than its last year’s outlay, Bloomberg data showed.

“The demand-recovery post the first and second wave of the pandemic has fuelled the capex cycle across many sectors in FY22. In particular, capex has been high for sectors where the Production Linked Incentive (PLI) scheme has been announced by the government, especially auto components, electronics, Active Pharmaceutical Ingredients (APIs), metals and mining, among others,” Kinjal Shah, vice president and co-group head-Corporate Sector Ratings at ICRA said.

“The latest data for ‘private corporates’ in the listed space is now showing traction (aggregate capex rises to Rs 6.3 trillion in FY22 versus Rs 5.5 trillion in FY21) along with evidence of a pick-up in household investments in real estate. Also, combined government capex rose to Rs 11.1 trillion in FY22 and is likely to exceed Rs14 trillion in FY23 going by budget estimates,” ICICI Securities said in a note.

The rise in capex in the listed space was driven by the capital-intensive sectors of energy, utilities, consumer discretionary, telecom and industrials, while the central government spent Rs 5.9 trillion and state governments spent Rs 5.2 trillion during the year. The Gross Fixed Capital Formation (GFCF) and construction activity growth is outpacing the nominal GDP growth during the current recovery phase in the economy.

“This indicates that the capex activity is also robust outside corporates and government institutions, which largely encompasses the investment of households into real estate,” the brokerage firm said.

ICRA’s Kinjal Shah said that the capex cycle for India Inc is expected to continue in FY23 as companies fulfil their commitment under the PLI scheme.
For instance, JSW Steel has earmarked Rs 20,000 crore capex for the current fiscal, while Tata Steel, which had guided for a capex of `12,000 crore for the current fiscal, might revise it upwards “if the markets are good”.

“…we have planned for Rs 200 crore of growth capex in the current year, wherein we are investing in the aluminium business towards vertical integration. We are also investing in oil & gas to augment R&R (reserves and resources) and mitigate any natural decline in the oil fields. We are also looking to double the capacity at Zinc International and ESL Steel,” Ajay Goel, group acting CFO at Vedanta in an investors’ call.

Vedanta’s capex for its aluminium business would be $1.4 billion over the next two years, top management said in the call.
Factors such as the structural reforms brought about by the PLI schemes, reduced corporate tax rates, firms diversifying supply chains, investing in green initiatives and rising domestic and export demand will sustain rising capex cycle in the near-to-medium term, Crisil Research’s Gandhi added.



Author: Howard Caldwell