Without producing enough revenue, a business will struggle even to carry out ordinary tasks like paying suppliers, purchasing raw materials, and paying its staff, let alone making investments. Besides, a company needs ample cash on hand to also meet its dividend obligations should it decide to reward its shareholders. Moreover, businesses with sufficient cash reserves can keep themselves safe from catastrophes like insufficient liquidity, the exodus of foreign institutional investors, and high-interest rates. All of these references highlight the importance of having ample cash on hand for companies.
In this article, we discuss the top 5 cash-rich companies in India.
Top 5 Cash-Rich Companies in India
||Market Cap (in ₹crore)
||Closing Price (₹)
||FCF (in ₹crore)
||5-Yr CAGR (%)
The above data set is as of September 13, 2023, and the stocks have been selected from Nifty 100 Universe.
- Life Insurance Corporation of India Limited (LIC): Life Insurance Corporation of India is engaged in offering life insurance in and outside India. The company’s product portfolio revolves around Insurance Plans, Pension Plans, Unit Linked Plans, Micro Insurance Plans, Withdrawn Plans, and Health Plans. For FY 2023, the company recorded sales of ₹7,81,543 crore and net profit of ₹36,397 crore. The company posted a cash balance of ₹45,498 crore as of March 31, 2023, and closed the year with nil debt.
- Tata Consultancy Services Limited: Tata Consultancy Services (TCS) provides IT, consulting and business solutions. The company has partnered with many of the world’s largest businesses in their transformation journeys for over 50 years. TCS offers a consulting-led, cognitive-powered, integrated portfolio of business, technology and engineering services and solutions. For FY 2023, the company recorded sales of ₹2,25,458 crore and net profit of ₹42,303 crore. As of March 31, 2033, the company recorded cash and bank balance of ₹11,032 crore and posted nil debt at the end of the year.
- Infosys Limited: Infosys Ltd provides consulting, technology, outsourcing and next-generation digital services to enable clients to execute strategies for their digital transformation. The company is the second largest Information Technology company in India after TCS. For FY 2023, the company recorded sales of ₹1,46,767 crore and net profit of ₹33,322 crore. The company recorded a cash and bank balance of ₹12,173 crore and nil debt at the end of FY 2023.
- HDFC Bank Limited: HDFC Bank Limited provides a range of banking services covering commercial and investment banking on the wholesale and transactional/branch banking on the retail side. For FY23, the company recorded sales of ₹1,70,754 crore and net profit of ₹46,149 crore. The bank closed FY23 with total reserves of ₹2,88,879.53 crore, and borrowings stood at ₹2,56,548.66 crore.
- State Bank of India Limited: State Bank of India is a Fortune 500 company. It is an Indian Multinational, Public Sector banking and financial services statutory body headquartered in Mumbai. It is the largest and oldest bank in India, with over 200 years of history. For FY23, the company recorded sales of ₹3,50,845 crore and net profit of ₹57,750 crore. The bank posted total reserves of ₹3,26,715.99 crore and borrowings of ₹4,93,135.16 crore.
Now, let’s read more about cash-rich companies.
What is a Company’s Cash and Bank Balance?
The first items in the current asset area of the balance sheet are cash and cash equivalents. These include investments the company can quickly turn into cash, including treasury bills, commercial papers, and marketable security. It also records petty cash accounts – funds set aside to pay daily running costs in the cash and cash equivalent category. All such liquid assets are used by the company to pay its debts and expenses.
How does a Company Calculate Cash Balance for a Particular Period?
You must have been told that before investing in any company, you should review the 3 financial statements. One of these, the cash flow statement, totals the yearly inflow and outflow of cash and cash equivalents. Understanding the basics of the cash flow statement is crucial when looking at a list of businesses with lots of cash. A simple classification of cash flows into three categories of activity includes:
- Cash from Operating Activities: All cash originating from business operations is included in this group. In other words, it demonstrates how much money a business generates from its goods or services.
- Cash from Investing Activities: Any sources and uses of cash from a company’s investments fall under this category, including the buying or selling of an asset, loans to suppliers or payments from clients, and any payments made with mergers and acquisitions.
- Cash from Financing Activities: Cash received from banks or investors, dividend payments to shareholders, stock repurchase payments, and debt principal repayment (loans) are all included in this category.
What is the Importance of Free Cash Flow While Analysing a Cash Rich Business?
The cash that a company generates after deducting cash outflows for operating expenses and capital asset maintenance is known as Free Cash Flow (FCF). Free cash flow, as opposed to earnings or net income, is a metric of profitability that takes into account both changes in working capital from the balance sheet as well as spending on assets and equipment.
It also eliminates non-cash expenses from the income statement. Free cash flow is a metric used by management and investors to assess a company’s financial stability. Free cash flow may highlight underlying issues before they appear on the income statement.
Cash is not the only parameter to consider while investing in any company. There are other factors such as topline and bottom line growth, margins, debt position, outlook, etc.
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Disclaimer: This article has been written for educational purposes only. The securities quoted are only examples and not recommendations.