The cash position of the top listed companies grew faster and hit ₹17.5 lakh crore in FY25 driven by healthy operating margins even as capex recorded modest growth.
businessline analysis of Capitaline data showed that cash and cash equivalent balances of the Nifty500 companies grew 17 per cent year-on-year (y-o-y) to hit ₹17.5 lakh crore in FY25. This is higher than the growth of 12 per cent (y-o-y) recorded in FY24. Further, the top 10 companies in terms of cash balances held 37 per cent of the total cash pool of the Nifty500 universe in the fiscal.
The big guns of corporate world including Reliance Industries (₹2.3 lakh crore), Tata Motors (₹0.7 lakh crore), Larsen & Toubro (₹0.6 lakh crore), Wipro (₹0.5 lakh crore) and TCS (₹0.5 lakh crore) make up the top five in terms of cash balances.
Among the top 10 Nifty500 companies sitting on largest cash piles, Mahindra & Mahindra and Hindustan Aeronautics recorded the biggest growth in cash at 66 per cent and 44 per cent respectively.
Indus Towers, Vodafone Idea, Transformers & Rectifiers India, Aster DM Healthcare and Gravita India are the top companies that grew their cash balances by highest multiples in the fiscal. 8 out of the 10 top firms in cash growth hail from capital intensive sectors.
While companies have not entirely cut back on capex, healthy margins seem to have helped them accumulate cash. Analysis of Capitaline data showed that fixed assets (including capital work-in-progress) of the Nifty500 entities grew at 12 per cent in the fiscal at ₹73.2 lakh crore. The y-o-y growth in fixed assets in FY24 was 9 per cent.
“Operating margins of companies have improved in FY25 as commodity prices started correcting in Q3 and Q4, and this has flowed in cash flows. The overall geopolitical and trade uncertainty has kept private capex lukewarm,” Soumyajit Niyogi, Director, India Ratings & Research, said.
As per Motilal Oswal’s new research, profits for the Nifty-500 universe experienced double-digit growth in FY25 rising 10.5% y-o-y - a notable growth given the high base of previous fiscal. This growth also came in a challenging year characterized by weak consumption, a slowdown in government spending and volatile trade year.
Madan Sabnavis, chief economist at Bank of Baroda, said that FY25 had lesser opportunities for private capex given the sluggish demand and the geopolitical & trade uncertainties. As the cash reserves get built from profits, they are either invested in capex or companies build it up for future use and companies seem to have built up balance sheet strength with future in mind, he adds.
Vivek Iyer, Partner and Financial Services Risk Leader, Grant Thornton Bharat says that companies that have a high source of dependency on global markets for their revenue are companies that have held cash given the global economic uncertainty. “Tariffs and continually evolving sovereign conflicts do not seem to make things smooth,” he adds.