S&P Global Ratings estimates that major companies will double capital expenditure over the next five years to $800-850 billion.
In a bid to chase growth opportunities, Indian companies are poised to double their capital expenditure (capex) spending to nearly $850 billion over the next five years. This investment plan, which will be largely financed by operating cash flows and facilitated by ample domestic funding options, will help in meeting demand underpinned by favourable government policies and a positive economic outlook.
According to a recent report by S&P Global Ratings, the major companies are projected to double capital expenditure over the next five years, to $800-850 billion. “These hefty spending plans are more likely to strengthen than weaken credit profiles,” the report said.
The analysis is based on the capex trends of the Top100 Indian companies by market capitalisation. These listed companies had aggregate revenue of about $1 trillion and Ebitda of $150 billion in FY25, and represents a good cross-section of Indian corporates, S&P Global Ratings said.
The report noted that traditional sectors such as infrastructure and industrial will be see a rise in capex spending to the tune of 100% and 40-50%, respectively, over the next five years. Adding to it, airlines and green energy will account for 15% of the total capex, or 40% of the increase in capex, by 2030.
“The expansion is not without risks—particularly for the power sector, which has the highest capital expenditure (capex) needs. Leverage in sectors such as steel and cement depends heavily on product prices and input costs, both of which have seen increased volatility in recent years. For most other sectors, any operational setbacks could reverse balance sheet health,” S&P Global Ratings noted.
New energy, airlines to drive spending
The report highlighted that higher investments in power, particularly renewables, will be a major spending area. “Power, including transmission, combined with airlines, and emerging areas like green hydrogen, will by our estimates account for about three-quarters of the increase in capex over the next five years,” it said.
In absolute terms, investments in airports could double, or even triple during this period to $25-35 billion. The report noted that existing airports need high capex. Of the Top 15 airports in India by passenger volume, most face capacity constraints, while the government’s plans to privatise 11 airports it owns could result in additional capex.
In the airlines sector, total investment in new aircraft will likely exceed $100 billion. “The aircraft pipeline of over 1,600 aircraft of all Indian airlines is about $150 billion—this is up to 2035. This will triple the fleet size of the country's largest airlines. Supply issues from Boeing and Airbus could delay the expansion plans,” it said.
In the power and transmission sector, about $300 billion of capex is projected over the next five years, driven by the country's target to meet an average 5.4% demand growth by 2030 and to have renewable energy capacity of 500 giga watt (GW).
Conventional sectors such as steel, cement, oil and gas, telecom, and autos will grow at a steadier pace of 30-40%, it added.
According to the report, the predominance of lease funding will moderate the increase in borrowings in the airlines sector. New areas such as green hydrogen, semiconductors and battery plants could see significant debt funding. However, these projects are undertaken predominantly by large companies, such as the semiconductor plans of Tata Electronics and the Adani Group's green hydrogen push.
“While total investments in these areas could be in the range of $50-100 billion, plans can be scaled back based on the commercial payoff,” the report said.
Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.