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India Inc has reaped rich dividends by investing in equity and hybrid of mutual fund schemes, even as its revenue growth hit the lowest levels in last 3.7 years during the June quarter.
The average asset of corporates in hybrid mutual fund schemes doubled year-on-year to ₹1.39 lakh crore in the June quarter, while that of equity schemes jumped 53 per cent to ₹2.39 lakh crore.
With the concern of high equity valuation, corporates’ assets under management in gold ETFs jumped 50 per cent to ₹17,415 crore, and gilt funds assets increased 45 per cent to ₹19,812 crore year-on-year in the June quarter. Other ETFs assets increased 37 per cent to ₹6.70 lakh crore.
Sriram BKR, Senior Investment Strategist at Geojit Financial Services, said corporates have recently become more active investors in equity-oriented mutual funds, and their future decision will be influenced by market movements in the future.
Corporates may choose to keep their short-term funds in fixed income kind of schemes and tend to plough their non-core investments (say financial assets) back into their business whenever they find good growth opportunities, he added.
In FY24, corporates reaped rich harvests, with their assets in hybrid and equity schemes increasing 107 per cent and 48 per cent year-on-year, respectively. Corporate assets in Gold ETCs and other ETFs also paid rich dividends, increasing 38 per cent and 37 per cent, respectively.
Revenue slowdown
Corporate India registered the lowest revenue growth of 5-7 per cent in the June quarter against 7 per cent logged in the March quarter largely due to marked slowdown in demand.
Of the top 10 sectors that contributed nearly three-fourths of the overall revenue, all but three logged margin expansion.
The construction industry’s margins were primarily impacted by pressure on revenue, while the steel industry’s margin contracted a tad on-year and on-quarter due to a pick-up in iron ore prices, according to the CRISIL Market Intelligence and Analytics analysis of 350 companies.
Arindam Pal, Associate Director - Research, CRISIL Market Intelligence and Analytics, said going forward, corporate performance is expected to be supported by improved demand during the festive season, particularly after a likely good monsoon that would push up rural demand.
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