Financial statements published by non-finance listed companies indicate an uptick in investments. As of 30 September 2025, the aggregated net fixed assets of 3,309 listed non-finance companies were 9.5 percent higher than they were a year ago. This is the highest year-on-year (y-o-y) growth in net fixed assets compared to the growth seen in the past five years. The growth could have been higher. Corporate India’s confidence in investing into fixed assets is improving, but there is headroom still.
Growth in net fixed assets has been conspicuously low in the last five years, i.e. since the Covid year of 2019-20. This is the period when corporates made huge profits. But, they did not plough these profits commensurately into building their fixed assets base.
The y-o-y growth in net profits is a volatile metric. In the post 2019-20 period it has ranged from -4 to 1,109 percent (-27 to 22,705 percent). Even after adjusting for prior period and extraordinary transactions (P&E), net profit y-o-y growth ranges from -2 to 379 percent(-55 to 247 percent). The median is a better measure of the average growth in profits, and this works out to 14.3 percent after P&E.
Compared to this galloping pace of profit growth, net fixed assets grew by a staid 5.5 percent per annum, with a range of 4 to 8 percent. The corporate sector has chosen to use their profits to wind down their outstanding borrowing than to build assets. As a result, the debt:equity ratio has dropped from 0.65 times as of September 2022 to 0.5 times as of September 2025.
In this context, the 9.5 percent rise in net fixed assets of September 2025 is a significant break from the average performance of the recent past.
This break from the past can also be seen as a progression of gradually rising growth in net fixed assets. During the five half-yearly observations from September 2020 through September 2022, the average y-o-y growth in net fixed assets of listed non-finance companies was 4.5 percent. In the following five half-yearly observations March 2023 through March 2025, the average was significantly higher at 6.5 percent. And, then as of September 2025, the growth rate rises further and much higher to 9.5 percent.
This is the redeeming part of inferences drawn from the aggregated balance sheet of non-finance listed companies. This is countered by the alternate use of funds.
The two major competing applications of funds of non-finance companies are investments into fixed assets and investments into financial instruments. Investment into net fixed assets provides the foundation for future business growth. Investment into financial investment provides the liquidity of temporary investments till these can be fully deployed into fixed assets. The former has characteristics of sunk costs which are expected to pay in the long run, while the latter is largely liquid but expected to be a short-term deployment.
Financial statements of non-finance companies show a steady shift in favour of financial investments. The ratio of outstanding net fixed assets to outstanding investments seen in the aggregated balance sheet of non-finance companies had peaked at 3 as of March 2012. It has fallen dramatically since then. It first fell to an average of 2.4 between September 2012 and September 2015. Then, for a long period of over 8 years, the ratio stabilised at 1.7 between March 2016 and March 2024. In the last one year from September 2024 through September 2025, the ratio is down to just 1.4.
The steady and substantial fall in the share of net fixed assets in the balance sheet of non-finance companies compared to financial investments a halving of the ratio from 3 to 1.4 over a period of more than a decade – is noteworthy.
In spite of the increase in y-o-y growth in net fixed assets, the relative importance of financial investments has not eroded. As of September 2025, net fixed assets of non-finance companies were 1.4 times their financial investments. This is the lowest that this ratio has seen.
Thus, while the net fixed assets growth as of September 2025 is the highest in the last five years, given that financial investments grew faster (at 11.7 percent) than fixed assets (9.5 percent), it can be inferred that the net fixed assets growth could have been better. Companies continued to prefer financial investments more than investments into fixed assets.
The aggregated balance sheet of non-finance companies does not pose any constraint for companies to invest into fixed assets. The debt:equity ratio is extremely low at 0.5 times, interest cover is more than comfortable at 5.3 times and the cost of borrowing has been falling. Interest incidence has dropped from 8.5 percent as of September 2022 to 8.2 percent as of September 2025.
The steady increase in the y-o-y growth in net fixed assets seen since March 2023 seems to have gathered some pace in 2025. This could be an early sign of a very slow revival in investments. But, this enthusiasm regarding revival of investment demand must be tempered by the continued preference of corporate India for investments into financial instruments compared to investment into plant and machinery and other fixed assets.
