India’s corporations exit a challenging period with healthier finances, signalling an imminent shift towards increased capital spending amid emerging trends in renewables, electric mobility, and digital infrastructure.
India Inc has emerged from a bruising five-year stretch with balance sheets in better shape than they have been for some time, giving companies more room to invest as the next cycle of growth takes shape. A review of 760 firms by The Hindu BusinessLine, using Capitaline data, suggests that corporate India has weathered the pandemic, commodity swings, geopolitical shocks and technology-led disruption with financial discipline largely intact. That matters because, according to the analysis, the next phase of competition is likely to be shaped by artificial intelligence, volatile energy markets and deeper trade protectionism, all of which will demand stronger financial buffers.
The clearest sign of improvement is in leverage. For the 654 non-BFSI companies in the sample, interest coverage has improved to 5.7 times, up from an average of 4.9 times over the previous four years, while debt-to-equity has eased to 0.46 times and net debt to EBITDA to 1.4 times, both below recent averages. Automobiles have led the improvement, helped by robust demand for sport utility vehicles, electric vehicles and feature-rich models, while steel and cement have also strengthened their finances after years of caution. Refineries and power producers, however, remain more debt-heavy as they continue to expand capacity.
Crisil Ratings has recently reached a similar conclusion. In its second-half fiscal 2026 review, the agency said India Inc’s credit ratio moderated to 1.50 times from 2.17 times in the first half, but still pointed to a stable outlook for fiscal 2027. Crisil said the median debt-to-equity ratio for rated companies stood at 0.45 times as of March 31, 2026, and argued that strong balance sheets helped firms absorb shocks from the West Asia conflict. A separate Crisil stress test covering 34 sectors found companies were resilient enough to handle supply-chain disruptions, higher fuel and freight costs and a weaker rupee, backed by domestic demand and government capital spending.
Even so, the corporate investment picture is not uniformly exuberant. Mint reported that although profits have recovered, many firms are still putting more money into financial investments than into factories and equipment, with net fixed assets rising 7% year-on-year in fiscal 2026 while capital work in progress fell 6%. That suggests caution remains in parts of the private sector, with weak demand, spare capacity and global uncertainty still weighing on decisions to expand. The broader economy has also been carrying a heavier external burden, with India’s external debt climbing to $762.8 billion by March 2026, according to figures cited by The Economic Times, even as debt servicing improved.
Still, the medium-term case for spending appears stronger than it has in years. The BusinessLine analysis says fixed asset turnover is close to a high at 1.65 times in fiscal 2026, which implies that future sales growth will increasingly require new capacity. It also argues that the next capital spending wave is likely to shift towards renewables, storage, data centres, defence, electric mobility and cleaner energy systems, alongside healthcare and hotels. As Crisil and other agencies note, healthy domestic demand and stronger corporate finances are helping India Inc remain resilient; the question now is whether that resilience is finally translating into a broader investment cycle.
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