Rights Issues Reach 5-Year High in FY26 Amid Market Volatility

India Inc. Seeks Shareholder Capital as Funding Options Dwindle

In a significant shift, Indian companies are increasingly relying on their own shareholders for capital, a trend that has been observed in recent times. According to data, in the first quarter of 2023, Indian companies raised a total of ₹1,43,419 crore (approximately $17.6 billion) through share buybacks and dividend payments, a significant increase from ₹83,419 crore in the same period last year.

This trend is largely attributed to the dwindling availability of other funding options. The Indian debt market has been facing a liquidity crunch, with many companies struggling to raise funds through bond issuances. Additionally, the Indian government's recent regulations have made it more challenging for companies to raise funds through initial public offerings (IPOs).

The following table highlights the growth in share buybacks and dividend payments by Indian companies in the first quarter of 2023 compared to the same period last year:

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As can be seen from the table, share buybacks have seen a significant increase of 166% in the first quarter of 2023 compared to the same period last year. Dividend payments have also seen a notable increase of 171% in the same period.

This trend is expected to continue in the coming quarters, with many Indian companies likely to rely on their shareholders for capital. While this may provide a short-term solution for companies, it may also lead to a decrease in the overall market capitalization of Indian companies.