CAPEX: FY21 Listed Space Capital expenditure Resilient Relative To ‘Investment Rate’

An ICICI Securities report noted that Capital expenditure of listed companies was relatively resilient than the 'investment rate' in the pandemic-hit FY21. in the pre-pandemic period of FY20, 'nominal investment rate' dipped to 28.8 percent while the share of 'non-financial corporations' in the overall Gross fixed capital formation(GFCF) was relatively weak at 46 percent as compared to the 5-year average (FY15-20) of 48.3 percent, it noted.

In the pandemic year of FY21, the 'nominal Investment rate', dipped further to 27.1 percent which translates into a 9 percent dip in GFCF to Rs 53.5 trillion. "However, capex in the listed corporate space was relatively better with cash spent on 'plant property and equipment' (PPE) falling by 6.6 percent year-on-year to Rs 5.1 trillion in FY21 while including acquisitions and investments in subsidiaries it was flat year-on-year at Rs 5.6 trillion," it said.

Consequently, the ratio of listed space CAPEX to GFCF improved in FY21 to 10.5 percent. While the aggregate CAPEX by listed India Inc was resilient, the CFO (cash flow from operations) generated by them grew sharply by 25 percent year-on-year to reach Rs 11.9 trillion.

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