Unlisted companies bring down private capex deployment

Chennai: The slowdown in the deployment of capex by unlisted private companies has brought down share of private capex in the Gross Fixed Capital Formation (GFCF) to a decadal low.

The share of private capital expenditure (capex) in the Gross Fixed Capital Formation (GFCF) has declined over the years, reaching a decadal low of 33 per cent in FY2024.

Over FY2015 to FY2024, GFCF has grown at a compounded annual growth rate (CAGR) of 10 per cent. However, this has been slowing down since FY2023. The GFCF growth moderated to 9 per cent in FY2024 from 20 per cent in FY2023, finds ICRA.

While the government’s strong capex push and household investments in real estate contributed favourably to the growth in GFCF in FY2024, private capex growth remained slow. This led to moderation in the GFCF growth.

“Private capex was muted in FY2024 and 11M FY2025 after having witnessed a healthy post-pandemic recovery in FY2022 and FY2023. Weak domestic consumption, especially urban, muted export demand, and influx of cheap Chinese imports in some sectors, among other factors, restricted the private sector’s capacity expansion plans,” K Ravichandran, Executive Vice President & Chief Rating Officer, ICRA.

This slowdown is being largely led by unlisted entities, as listed corporates continue to spend. Capex by listed entities picked up from FY2022, growing by 28 per cent in FY2023 and 12 per cent in FY2024. Oil and gas, power, auto, iron and steel, and telecom, have been the top few sectors shouldering private sector investments. This led to an uptick in the share of listed corporates in the total capex pie to 16 per cent in FY2024 from 14 per cent in FY2022.