A Bank of Baroda report finds infra-linked sectors like electricals and capital goods, and FMCGs, have stronger capacity use. This signals potential for fresh investment if demand sustains, with these industries showing a rising asset turnover ratio.
Infrastructure-linked sectors such as electricals and capital goods, besides FMCGs, are showing signs of stronger capacity utilisation and could see higher fresh investment if current trends sustain, according to a Bank of Baroda Economic Research report.
Electricals, capital goods and infrastructure were among six sectors where the asset turnover ratio increased in both FY25 and FY26. FMCG, logistics and agriculture were the other sectors recording a sustained improvement. The report, which analysed company balance sheets across industries, used the ratio of gross sales to gross fixed assets as a proxy for capacity utilisation. A rising ratio indicates better use of existing assets as sales and output increase, which can eventually create the need for additional investment if demand remains strong.
Sectors with Sustained Growth
Among these, the ratio for electricals increased from 3.49 in 2024 to 3.69 in 2025 and 3.84 in 2026. For infrastructure, it rose from 2.94 to 3.10 and further to 3.13, while capital goods saw the ratio rise from 2.74 to 2.84 and 2.93 over the same period. FMCG also recorded a sustained increase, with its ratio moving from 2.00 in 2024 to 2.16 in 2025 and 2.25 in 2026. "Electricals, capital goods, infrastructure and FMCGs have the highest ratios of above 2 which are increasing continuously thus indicating high potential for future investment," the report said.
BoB Research attributed the improvement in electricals, capital goods and infrastructure to high public expenditure, which has created strong linkages with these industries and led to better utilisation of capacity. In FMCG, the report pointed to a revival in demand and the introduction of new products, including in the premium segment.
Other Improving Sectors
A second set of sectors also showed improving trends in FY26 after their asset turnover ratios had declined in FY25. These included automobiles and ancillaries, IT, chemicals, non-ferrous metals, diversified companies and diamonds and jewellery. For IT, the report said the push towards data centres and artificial intelligence is calling for higher investment. It also said infrastructure activity has helped improve ratios in chemicals and non-ferrous metals, which could signal higher investment in coming years.
Sectors with Declining Ratios
However, sectors including crude oil, telecom, iron and steel and construction materials recorded declining ratios. BoB cautioned that this does not necessarily indicate weak future investment, particularly in capital-intensive sectors where large projects have long gestation periods before additional capacity translates into output.
Future Outlook
The report concluded that the trends provide "early signs" of industries that could potentially move towards higher investment, while stressing that future capital expenditure would also depend on past investment patterns and requirements such as product diversification. (ANI)
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