India Inc post-pandemic: Record profits, cash surge, but private investment lags

India Inc's post-pandemic trends are puzzling on many counts. Outbreak of Covid and realisation of supply chain concentrations resulted in corporate tax competition across many sovereign jurisdictions. The case for India was no different, and corporate tax rate was cut sharply to accommodate supply shock from the pandemic. But subsequent turn of events shows a picture that's difficult to reconcile with post-pandemic broader recovery.

Financial With post-pandemic tax cut and lower interest rates, listed entities, barring BFSI, achieved substantial deleveraging. Loan fund to capital ratios has declined to a 15-yr low of 0.9% as of March 2025 from 1.3% in March 2019. Profit after tax increased to more than ₹11 lakh cr in FY25 from less than ₹4 lakh cr in FY19. Interest coverage ratio (Ebitda/interest) improved to 5% in FY25 from 3.5% in FY16. Operating income also improved by 300 bps, with 15% Ebitda margin in FY25 from around 12% a decade ago.

Cash Current aggregate financials of listed entities show India Inc cash holding has tripled to more than ₹13 lakh cr as of March 2025 from around ₹4.5 lakh cr in March 2018.


Pvt investment Investment announcements by private sector have significantly increased. Private sector participation, which was around 40% in FY19, has increased to 74% in Q1 FY26. Investment announcements have reached an all-time high of ₹51 lakh cr in FY25, compared to ₹10 lakh cr in FY20. In Q1 FY26, total announcements of ₹19.1 lakh cr have been made vis-a-vis ₹8.6 lakh cr in Q1 FY25, registering a growth of 123%, a quarter of which came from private sector.

Lending rate Weighted average lending rate (WALR) on fresh rupee loan has declined to 7.82% in June 2025 from 8.72% two years ago.

So, what does all this translate to in terms of impact on capital formation? Although capacity utilisation has improved - now at a 48-quarter high at 77.7% in March 2025 - the impact on capital formation is muted. With higher ploughing back of profit, capital funds increased 4.3x from March 2011 to March 2025. But fixed asset creation increased by 3.6x during the same period. This indicates a slowdown in pace of asset addition.

Also, announcement to actual conversion has been slow, despite a favourable policy environment consisting of capex thrust in the budget, low interest rates and relatively robust demand. More importantly, stock exchange data shows that during the pandemic in FY21, valuations of Indian corporates were very attractive. Seizing opportunities, India Inc increased promoter holding from around 42% in September 2019 to more than 45%, which has now reduced to around 40%.

Share of private promoters in India's capital market, consolidated across all NSE-listed companies, declined to an 8-yr low of 40.6% as on June 30, 2025, from more than 45% in December 2021. Thus, part of the loss in promoter control due to deleveraging was regained though windfalls from tax cuts, and again liquidated through stake sale.

This indicates that, with the benefit of hindsight, a policy of ease of doing business and a low tax regime has an unintended consequence. There is limited crowding-in of private investment demand after years of public sector-led capex. GoI has done most of the heavy lifting.

India Inc, sitting on a huge cash pile, should now display the proverbial 'animal spirits' and participate in the India growth story more vigorously. Uncertainties can't be used as an alibi for private investments not coming forward. As indicators like S&P's latest rating upgrade demonstrate, India's large domestic economy could cushion any adverse shock. As the S&P report reveals, exposure of Indian exports subjected to tariffs is only at 1.2% of GDP. Additionally, decision to reform and rationalise GST will further aid consumption. Private investors shouldn't wait till GST cuts are effective. They should open the chest now, and use the dry powder. After all, ships are safe in harbour. But that's not what ships are built for.