India on the cusp of the post-Covid capex boom, say analysts

• The much-awaited capex cycle recovery could finally be around the corner.
• Analysts say factors like the government’s growth push, PLI schemes and demand recovery are key green signals for the private sector’s capex spends.
• The post-Covid capex boom could be led by Mukesh Ambani and Gautam Adani, across sectors, along with other big names such as UltraTech Cement, Bharti Airtel, JSW Steel, Tata Steel and Tata Power, among others.

After multiple false starts throughout the last decade, India may finally be on the cusp of a “big” capex cycle recovery, analysts say. The recovery, initially kickstarted by the government, could see the private sector finally catching up.

Analysts are seeing several green signals that give them the confidence that this time the capex cycle recovery is for real – this includes de-leveraged balance sheets, improved profitability, a rebound in domestic demand and the end of the non-performing assets (NPA) cycle.

“Going forward, improved private corporate balance sheet, rising capacity utilisation level, robust demand sentiments, higher capital spending and various policy initiatives by the government are expected to revive the capex cycle,” said a report by the Reserve Bank of India.

“The analysis clearly highlights multiple engines of growth starting to fire together, which would lend stability and visibility to capital outlay in the economy over FY22-26,” said a report by HDFC Institutional Research.

The power and infrastructure sectors have led the previous capex cycle, and going by the latest data, the upcoming capex cycle could once again be led by these capital-intensive industries.

The post-Covid capex boom could be led by Mukesh Ambani and Gautam Adani, across sectors, along with other big names including UltraTech Cement, Bharti Airtel, JSW Steel, Tata Steel and Tata Power.

“Steel, cement, textiles, oil and gas, EV, solar, chemicals, food processing and renewables will push capex higher,” said a report by Prabhudas Lilladher, adding that the government’s push for growth and production-linked incentives (PLI) could kickstart a multi-year capex cycle.


Even though the power and infrastructure industries accounted for over half of the total project costs sanctioned by banks in FY22, it is still lower than FY21, the year of the pandemic, when these two industries accounted for over 70% of the total costs sanctioned.

The significant boost by the government to kickstart the economy after the Covid lockdown in 2020 has been counter-cyclical, according to HDFC. Despite this, the analysts predict a CAGR of 8-10% in the government’s capex over the next 3-5 years.

Two schemes – the National Infrastructure Pipeline worth ₹111 lakh crore, and the PLI scheme worth ₹2 lakh crore – will be the key drivers of the government’s capex growth, according to a report by Prabhudas Lilladher.

“Private sector capex has lagged government capex during FY20-22 but it will now outpace public spending due to increasing capex across multiple sectors (cement, metals, power, autos, chemicals and PLI-led capex),” the report added, saying the private sector’s capex could see a CAGR of 16.6%, outpacing the government by at least 60%.

Unsurprisingly, Reliance Industries and the Adani Group, led by India’s richest men, top the charts when it comes to capex plans from FY22 to FY24.


Broadly, across industries, HDFC sees a rise in capex spends in FY22 when compared to the previous ten years. The capex outlook is also mostly positive for all industries, barring sectors like realty and textiles, which saw higher capex in FY18 and FY16, respectively, due to a one-time payment by DLF and Welspun’s capex.

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