New Delhi. Covid-19 taught many people a lot. Some understood the importance of time, while some started focusing on health. The country's companies also learned a lesson from here. Indian companies learned how important it is for them to have cash reserves. This is why the latest figures are presenting a pleasant picture. In 2025, the 500 companies listed on the BSE have a cash reserve of Rs 7.6 lakh crore. This is 51 percent more than the Covid period.

According to data from ACE Equities, the cash reserve of BSE 500 companies was Rs 7.68 lakh crore as of 30 September 2024. It is worth mentioning that this does not include BFSI and Oil & Gas companies. According to the data, this figure is 51 per cent higher than the end of FY20. After the COVID-19 pandemic, Indian corporates have paid special attention to strengthening the balance sheet, and now their financial position is considered to be better than in the last several years. Experts believe that strong stock market, raising capital from IPO and QIP (Qualified Institutional Placement) as well as digitization and industry consolidation have put the companies in a strong position.

Emphasis on increasing cash reserves
Experts say that after the pandemic, Indian companies focused on lightening their balance sheets and raising more cash. Bhavesh Shah, Managing Director and Head of Investment Banking, Aquirus, said, "The Covid pandemic made companies realise the need to maintain high cash reserves. Along with this, consumer behaviour, such as 'revenge buying', boosted the performance of companies and strengthened cash reserves."

Role of stock market and QIP
Shah also pointed out that IPO and QIP rallies helped companies repay debts. "A large part of the funds raised from IPOs were used to repay debts. The market rewards companies that are debt-free," he said. Feroz Aziz, deputy CEO of Anand Rathi Wealth Ltd, said, "Digitisation has increased productivity, and cost control measures have improved the efficiency of companies. Regulations like the Insolvency Code have streamlined operations."

Strong balance sheet numbers
Santosh Pandey, president, Nuvama Professional Clients Group, said the debt-to-EBITDA ratio of BSE 500 companies is 2.5x-2.7x by March 2024, up from 4.5x pre-Covid. “This means companies can repay their debt in 2.5-3 years of their earnings, which is a healthy situation,” he said.

Cash use in 2025
Experts believe that in 2025 companies will focus on acquisitions and short-term projects. Pandey said, "Companies are focusing on acquisitions instead of setting up new units, especially in solar, cloud computing and pharma sectors." Aquirus' Shah said, "Indian companies will invest in manufacturing capacities to meet future demand and also preserve cash reserves. Acquisitions will be the key strategy for companies with strong business models."

M&A activities on the rise
Experts also said that consolidation will drive growth. Pandey said, “M&A activities have been strong across sectors. Companies with strong financials are strengthening their market position by acquiring smaller players.”

Though there are challenges like global trade war and a drop in domestic demand, experts believe that with strong cash reserves and low debt, Indian companies will navigate 2025 with confidence. "The drop in demand is believed to be temporary. Companies will not hesitate to deploy cash to take advantage of growth opportunities," Pandey said.