Indian companies risk for capital expenses. Stock Market News.

Indian companies increased capital expenditure even in difficult situations.

Mumbai: Top Indian companies have increased their capital expenditure in the first half of this financial year. This information has been obtained from the study of ICICI Securities. However, the conditions remain challenging for the growth of companies.

ICICI Securities included 1,192 non-financial companies in this study. During the first half of FY 2019-20, the capital expenditure of these companies on plant, property, equipment, acquisition and other things stood at Rs 2.4 lakh crore. This expenditure is 5.5 percent more than in the financial year 2018-19.

Analysts Vinod Karki and Siddharth Gupta said in the results of this study, "Despite the volatility associated with elections, softening growth, distance from risk and unfavorable weather for the second quarter of FY 2019-20, the first half capital expenditure figures do not disappoint. Huh."

The brokerage firm said, "Energy, auto, retail, technology services and material companies accounted for 44 per cent of the net fixed assets (NFA) in FY 2018-19. However, leading sectors like utilities, industrial, Telecom and Cement disappointed. "

ICICI Securities believes that the broader situation related to capital spending still remains challenging. Due to weak demand, declining confidence in the business and reduced government spending, companies were able to use only 69.8 per cent of their capacity in the September quarter.

The total operating cash flow after withdrawing interest stood at Rs 2.7 lakh crore, which is more than the capital expenditure. However, more cash came from select sectors such as IT, consumption, healthcare, materials, utilities and energy.

MRF, Aarti Industries, CEAT, Avenue Supermarts and Biocon spent 16 to 17 per cent of their NFA base as compared to FY 2018-19. "Companies using more capital are struggling to recover their costs," said Givi Giri, head of research at brokerage firm IIFL Securities.

The brokerage said, "This has put a brake on their investment. The economy is creeping up. Efforts are being made to complete stalled projects. Power, real estate are the key. Return of investment cycle due to weak demand in near future There is little hope. "

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