Capital expenditure (capex) trends among Nifty 50 companies revealed a mixed outlook for FY24, as highlighted in their respective reports. Reliance Industries Ltd. (RIL) led the pack despite reducing its consolidated capex from Rs 2.45 trillion in FY23 to Rs 1.39 trillion in FY24. The combined gross block formation and capital work in progress for the entire Nifty 50 were lower, driven primarily by RIL’s decision to cut back. Excluding RIL, gross block formation remained nearly flat for the rest of the companies.
Government vs. Private Capex: The Shift in Investment Strategies
For the past few years, the Indian government has been at the forefront of record-high capital expenditure, leading investment efforts in the country. However, private sector investment in manufacturing has been relatively subdued due to a variety of factors, including weak domestic consumption, tepid external demand, and competition from cheap Chinese imports.
Many companies have opted to wait for a rise in consumption before committing to new capacity creation. The Reserve Bank of India (RBI) reported that capacity utilization in the manufacturing sector reached 76.8% in Q4 of FY24—the highest in 11 years. This indicates a positive outlook for future investments, with improved balance sheets of banks and companies, as well as the government’s ongoing focus on capex. The RBI’s monetary policy statement on August 8 also hinted at a potential pickup in private investment, which could drive fixed investment in the coming years.
Leading companies with massive capex plans – FY24
Even after cutting its gross block formation, RIL topped the list for FY24, followed by Oil and Natural Gas Corporation (ONGC), Grasim Industries, and NTPC.
| Company | Gross Block Formation (Rs crore) |
| Reliance Industries | ₹ 1,39,000 |
| ONGC | ₹ 68,418 |
| Grasim Industries | ₹ 46,612 |
| NTPC | ₹ 43,614 |
Source: Business Standard
UltraTech Cement: Expanding at a Global Scale
UltraTech Cement, part of the Aditya Birla Group, has undertaken a massive capacity expansion plan that is unprecedented in the global cement sector. In FY24 alone, UltraTech increased its production capacity by 13.3 million tonnes per annum (MTPA), bringing its total to over 150 MTPA. This makes UltraTech’s capacity surpass 150% of the total cement production capacity in the United States and 80% of Europe’s.
Kumar Mangalam Birla, group head, emphasized this during an annual shareholder meeting, stating that the company plans to invest Rs 32,400 crore ($4 billion) over the next three years.
Massive Capex Plans for the Future
Several Indian conglomerates have announced massive capex plans for the coming years, with the Tata and Adani groups leading the charge. Key investment announcements include:
- Tata Group: Plans to invest $120 billion (Rs 10 trillion) across its various companies, including its burgeoning airline business.
- Adani Group: A $100 billion (Rs 8.39 trillion) investment plan over the next decade, primarily focusing on new airports, ports, and green-energy projects. According to Adani officials, funding for this expansion is already secured based on their projections.
- Reliance Industries (RIL): Estimated to invest $60 billion (Rs 5.03 trillion) over the next decade, as per projections from Morgan Stanley.
- JSW Group: Revised its investment target to $70 billion (Rs 5.87 trillion) by 2030, concentrating on new ports, steel, and infrastructure projects. JSW’s capex for Q1 FY25 stood at Rs 4,466 crore, with an additional Rs 228 crore spent on upfront mining payments. The company expects a consolidated capex of Rs 20,000 crore for FY25.
Conclusion
While government-led capital expenditure continues to play a dominant role in India’s economic landscape, the signs of resurgence in private capex, led by large conglomerates such as Tata, Adani, RIL, and JSW, suggest a promising outlook for the future. This shift in private sector investment could help drive India’s economic growth in the coming years, especially as capacity utilization levels reach historic highs and consumption begins to recover.
Future Capex Plans (Company-wise)
| Company | Capex Plan (Rs crore) | Timeframe |
| Tata Group | ₹ 10,00,000 | Next decade |
| Adani Group | ₹ 8,39,000 | Next decade |
| Reliance Industries | ₹ 5,03,000 | Next decade |
| JSW Group | ₹ 5,87,000 | By 2030 |
| UltraTech Cement | ₹ 32,400 | Next 3 years |
Source: Business Standard
Market this week
| 12th August 2024 (Open) | 16th August 2024 (Close) | %Change | |
| Nifty 50 | ₹ 24,320 | ₹ 24,541 | 0.9% |
| Sensex | ₹ 79,330 | ₹ 80,437 | 1.4% |
- Markets experienced volatility over the past week, reflecting choppy trading conditions.
- Despite negative job data, Indian markets demonstrated resilience.
- The RBI Monetary Policy Committee held rates steady, while the US is expected to consider a rate cut, likely in September.
- A V-shaped recovery pattern is emerging, with sharp drops followed by swift rebounds, signaling strong liquidity and buying interest.
- Short declines are presenting opportunities, and overall, markets are currently in a range-bound phase.
Weekly Leaderboard
| NSE Top Gainers | NSE Top Losers | ||||
| Stock | Change (%) | Stock | Change (%) | ||
| Tech Mahindra | ▲ | 5.2 % | Divi’s Labs | ▼ | (4.1) % |
| Wipro | ▲ | 5.1 % | Coal India | ▼ | (3.3) % |
| Infosys | ▲ | 5.0 % | Dr Reddy | ▼ | (3.1) % |
| HCL Tech | ▲ | 4.9 % | NTPC | ▼ | (3.1) % |
| TCS | ▲ | 4.4 % | Adani Ports & SEZ | ▼ | (2.6) % |
Stocks that made the news this week:
Escorts Kubota Ltd is planning an investment of up to Rs 4,500 crore to establish a greenfield facility in Uttar Pradesh. The farm and construction equipment manufacturer has submitted an investment proposal to the state government for land acquisition. The new integrated manufacturing facility is aimed at expanding the company’s existing capacities to support future growth.
- Macquarie has initiated coverage on India’s telecom sector with a positive outlook on Bharti Airtel and Bharti Hexacom. The brokerage has given Bharti Hexacom an ‘Outperform’ rating, with a target price of Rs 1,480 per share, suggesting a 31% upside, expecting its growth to mirror Airtel’s India Mobile operations. Bharti Airtel’s rating was upgraded from ‘Neutral’ to ‘Outperform’, with a revised price target of Rs 1,630, indicating an 11% upside. Macquarie supports Airtel’s earnings and de-leveraging potential, forecasting an improvement in ROIC from 10% to 18-20% by FY28.
- Shiva Cement surged in trading after reports from Moneycontrol indicated that JSW Cement, its promoter company, is nearing the filing of draft papers with SEBI to raise Rs 4,000 crore through an initial public offering (IPO). This would be the first major IPO in the cement sector since Nuvoco Vistas’ Rs 5,000 crore offering in August 2021.
