The Boring Fortune
Stronger balance sheets and rising demand are fuelling a new phase of investment
India is a country that thrives on narratives. Policymakers and investors alike talk endlessly about demographics, the digital stack, consumer brands and IPOs. These are the stories that dominate X threads and television debates. But markets tend not to reward stories for long. They reward cycles. And the cycle now taking shape, though less glamorous, is a capital-expenditure cycle.
The evidence is accumulating. The Reserve Bank of India projects private capex of roughly ₹2.67 trillion in FY26, more than 20% higher than the previous year. For most of the past decade investment was flat, stuck near ₹1.5 trillion annually. Corporate balance sheets are stronger than at any point in recent memory: debt-to-equity ratios have halved, interest coverage is more than double what it was ten years ago, and banks’ non-performing loans have fallen below 3% of assets. Capacity utilisation in industry has climbed above 75%, historically the level that prompts firms to add capacity. These are the conditions from which investment upturns tend to emerge.
Energy is a clear case. Power demand hit a record 250 gigawatts this summer, up from 185 gigawatts five years ago. Annual electricity consumption now exceeds 1,700 terawatt-hours, and is growing by 6–7% each year. Coal, which still provides about 70% of supply, cannot expand indefinitely. Renewables are being added at scale—190 gigawatts of capacity so far—but the constraint is increasingly the grid. India’s transmission network, already 470,000 circuit-kilometres, will need to nearly double by 2030. Power Grid Corporation has projects worth ₹1.4 trillion under way; Adani Transmission’s order book has trebled in a year. Such spending rarely makes headlines, but it is what keeps the lights on.
Logistics is another example. GST simplified the operating environment, but its impact is most visible today in physical networks. Dedicated freight corridors are cutting costs sharply. Container train volumes are rising by close to 10% a year. Cold-storage capacity has expanded from under 30m tonnes a decade ago to more than 40m today, increasingly outside major cities. Bond issuance by logistics and infrastructure companies has grown nearly threefold since 2020, a sign of private confidence in throughput growth.
Financial markets, however, appear reluctant to acknowledge the shift. Consumer-goods companies trade at 50-60 times earnings despite anaemic volume growth. IT services firms, facing slowing global demand, remain valued as growth stocks. Even banks, though in far better health, are unlikely to sustain the returns they generated in the last credit cycle. By contrast, firms building transmission lines, warehouses or power equipment still trade at single-digit multiples. The pricing gap reflects habit more than fundamentals.
India is not yet a consumption story, nor quite a technology story. It is an investment story. China’s boom in the 2000s was built first on cement, steel, and ports, and only later on apps. India will follow a different path, but the principle is similar: the wealth created in the coming decade is likely to flow to the businesses expanding capacity and strengthening infrastructure.
The capex cycle is already under way. The question is not whether investment will rise, but how quickly markets will reprice the sectors that benefit most. Investors who continue to focus only on the familiar stories risk missing where the real growth is happening.