‘Ratio of cash flow from ops to capex for India Inc at 2-decade high’

Mumbai: The ratio of cash flow from operations to capital expenditure for India companies has reached 2.2 times, the highest level in two decades, said a report by ICICI Securities.

The last time this happened was at the beginning of the previous capital expenditure cycle in FY02-04. The brokerage said this bodes well for future capital expenditure as demand and utilisation levels improve.

“Cash flow from operations after deducting interest obligations of ₹2.1 lakh crore is still high at 1.7 times capex. The net result is that aggregate debt dipped by ₹1.3 lakh crore in FY21, which is having its impact on industry credit growth and the piling up of cash and investments to ₹23 lakh crore at the end of FY21,” said the brokerage.


ICICI Securities said the nominal investment rate fell to 28.8% while the share of non-financial corporations in the overall gross fixed capital formation was relatively weak at 46% compared to the five-year average of 48.3%.

In FY21, the nominal investment rate fell further to 27.1%, which translates into a 9% dip in gross fixed capital formation to ₹53.5 lakh crore.

“Capex in the listed corporate space was relatively better with cash spent on ‘plant property and equipment’ (PPE) falling by 6.6% YoY to ₹5.1 lakh crore in FY21 while including acquisitions and investments in subsidiaries it was flat YoY at ₹5.6 lakh crore,” said ICICI Securities.

The ratio of listed space capex to gross fixed capital formation improved in FY21 to 10.5%, said ICICI Securities.