Suzlon, SBI, Vedanta, RIL: Corp capex at Rs 12L cr, resembles 2001-04 phase; stock picks

ICICI Securities in its latest strategy note said corporate capex of the listed space expanded to Rs 11.7 lakh crore over the twelve months (TTM) ended September 30. Consequently, the combined capex of listed corporates, centre and state has reached an all-time high of Rs 31.6 lakh during the same period. The brokerage felt the current trajectory resembled the 2001–2004 phase, which preceded an exponential growth period.

Within listed corporates, top sectors with over Rs 1 lakh crore capex contribution each are utilities, energy, metals, industrials and autos, in that order. The domestic brokerage said it is positive on corporate lenders, and stocks of capital goods, materials, and capex-driven industrial companies. Among its top picks are State Bank of India (SBI), Axis Bank, Larsen & Toubro (L&T), BHEL, JSW Energy, NTPC, Reliance Industries Ltd (RIL), HPCL and Vedanta.  Bharti Airtel, Ambuja Cements, Suzlon Energy and GR Infraprojects are among the domestic brokerage's other top picks. 

Capex expansion is becoming broad based – the count of companies with over $100 million annual capex has grown to 169 (vs. 135 in FY24), predominately comprised of sectors such as industrials (42), autos (19), metals (17) and consumption (17), followed by energy, utilities and healthcare at 15 each. 

"Aforementioned trends indicate that the relatively less capital-intensive sectors such as autos, consumption and healthcare are also showing meaningful capex contribution in terms of the number of stocks with capex of over $100 million.

Unlike US, where capex growth is AI-led now, ICICI Securities said old-economy sectors are fuelling India’s capex growthm thereby, positioning
India as a hedge against the AI euphoria in 2026.

In H1FY26, the investment rate has reached a cycle-high of 34 per cent, with relatively better incremental capital-output ratio (ICOR) of 4 per cent, reflecting higher productivity of capex.

"A real estate upcycle is further catalysing the overall investment rate in the economy; although, it is yet to become broad based, as affordable housing is yet to pick up," ICICI Securities said.

The brokerage said profit to GDP of India Inc has reached 5.2 per cent of GDP, largely driven by the cyclical sectors, thereby boosting internal financial resources. High internal cash generation has allowed corporates to bring the financial leverage to cycle-low levels, from where the re-leveraging can begin, it said. 

"Conditions for raising external capital via debt are extremely conducive driven by cycle-low corporate NPAs as well as low corporate credit growth, allowing a significant runway ahead from a cycle perspective. Buoyant equity markets continue to preserve the viability of equity financing as a path," it said.