CFO’s Tightrope: Growth vs Returns

In today’s volatile economic theatre, where fortunes can change with a single rating downgrade or capital call, India’s CFOs have emerged as the ultimate risk managers and growth architects. Behind every debt-free declaration, behind every strategic pivot, there’s a CFO orchestrating the fine balance between ambition and accountability. This article dives deep into the financial minds quietly shaping India’s corporate destiny [EasyDNNnews:PaidContentStart]

Introduction: The Pivotal Role of the CFO 

One Eye on the Spreadsheet, the Other on the Street 

In 2019, Reliance Industries Limited (RIL) set the stage for one of the boldest corporate manoeuvres in recent Indian financial history. The conglomerate announced a potential landmark deal: a 20 per cent stake sale in its oil-to-chemicals (O2C) business to Saudi Aramco, the world’s largest oil exporter. With an enterprise valuation of USD 75 billion assigned to the O2C vertical—including refining, petrochemicals, and a majority stake in its fuel retailing operations—the transaction promised not just capital infusion, but strategic realignment. 

Rating agencies promptly hailed the deal as ‘credit positive’, estimating it could shave off USD 16 billion from RIL’s net debt and reduce its adjusted net debt-to-EBITDA ratio from 3.2x to 2.0x—a stunning deleveraging move by any standard. In parallel, Reliance inked another pact to offload 49 per cent of its fuel marketing venture for USD 1 billion, with proceeds staggered across three tranches over two years. The vision was clear: a zero net-debt balance sheet by March 2021. 

But Fate Had Other Plans
Just as the ink was drying, the world was hurled into chaos. The oil markets turned volatile, and COVID-19—a black swan of historic proportions—descended, freezing global supply chains and clouding capital flows. The Aramco deal, once a symbol of corporate ambition, began to fade into uncertainty. 

Yet amid the upheaval, one man stood at the financial helm with an unflinching gaze: Alok Kumar Agarwal, Reliance’s Chief Financial Officer. What followed was a masterclass in financial strategy and agility. 

In 2020, under Agarwal’s stewardship, Reliance mounted a capital-raising offensive that would rewrite Indian corporate playbooks. Through a blend of rights issues and marquee stake sales in Jio Platforms to global heavyweights like Facebook and Google, the company raised an astonishing ₹1.52 lakh crore (~$20 billion)—a capital war chest unprecedented in Indian corporate history. 

The outcome? Reliance turned net debt-free within months. The balance sheet was fortified, the market rewarded the bold pivot, and investors regained faith. The share price of RIL more than doubled in the next few months, which is a great feat as it was India’s largest market cap company. Simultaneously, the group doubled down on its retail and digital bets—sowing seeds for future dominance while sidestepping the worst of a pandemic-hit economy. 

In the hands of CFOs like Agarwal, balance sheets become not just financial statements but strategic weapons. For investors, Reliance’s story offers a rare window into the high-stakes balancing act CFOs must perform—between capital markets and operational risk, between legacy businesses and future bets. 

More Than Just Number Crunchers: The Rise of India’s Strategic CFOs
Alok Agarwal’s financial wizardry at Reliance may have set the gold standard—but he is not alone. Across India Inc., a new breed of Chief Financial Officers has emerged—not merely as gatekeepers of cost but as architects of corporate destiny. 

Take for instance, Srinivasan Vaidyanathan, the CFO of HDFC Bank. As India’s largest private sector lender grappled with leadership transitions and evolving regulatory landscapes, Vaidyanathan’s steady hand ensured balance sheet resilience. His cautious provisioning during the peak of the pandemic, despite rising loan growth, preserved asset quality and enabled the bank to accelerate its digital transformation agenda without jeopardizing capital adequacy. 

In the consumer goods arena, Ritesh Tiwari, CFO of Hindustan Unilever (HUL), demonstrated the power of disciplined capital allocation. While HUL’s top-line remained steady through consumption headwinds, it was Tiwari’s sharp focus on working capital efficiency and synergies post the GSK Consumer Healthcare merger that delivered operating leverage. Even during volatile inflation cycles, HUL’s EBITDA margins held firm—proof that strong finance leadership can create value even in a low-growth environment. 

From Controllers to Catalysts
The modern Indian CFO is no longer confined to spreadsheets and quarterly forecasts. They are deeply embedded in strategy—steering M&As, enabling digital pivots, managing ESG frameworks, and engaging directly with global investors. More importantly, they are becoming co-pilots to the CEO, often influencing product innovation, business model transitions, and geopolitical risk management. 

Reading Between the Lines: What Smart Investors Should Watch in a CFO’s Playbook 

For long-term investors, the CEO often steals the spotlight— but it’s the CFO’s fingerprints that are etched across every meaningful shift in a company’s financial health. Behind every clean balance sheet, behind every bold capital raise or judicious cost cut, lies a CFO making dozens of invisible, yet consequential, decisions. 

So, what should savvy investors look for when evaluating a company’s financial stewards? 

1. Clarity of Capital Allocation
A CFO’s most crucial role is to ensure that every rupee is put to work efficiently. Is the company reinvesting earnings into high-ROCE (Return on Capital Employed) opportunities? Are acquisitions accretive or merely empire-building? Track record matters—so does transparency in explaining capital deployment. 

Bharti Airtel has been strategic in its spectrum allocation, ensuring efficient use of capital to support its telecom operations. This approach has helped the company maintain a strong market position. The company's strategic approach to spectrum allocation has yielded significant benefits. By prudently participating in spectrum auctions and leveraging trading and sharing agreements, Airtel has optimized its spectrum holdings. This strategic allocation has enabled the company to achieve a 95 per cent 4G population coverage. Moreover, Airtel's efficient spectrum management has helped reduce its spectrum costs as a percentage of revenue compared to the industry average. By being strategic in its spectrum allocation, Bharti Airtel has maintained a strong market position, and a significant lead in the 5G rollout in India. 

The chart shows how ROCE improved over the years for Bharti Airtel, helped by judicious use of capital towards, deleveraging, dividends, buybacks, and growth investments. 

2. Debt Discipline and Flexibility
Leverage can accelerate growth—but unchecked, it can also sink a business. Look for CFOs who maintain prudent debt-toequity ratios, have diversified funding sources, and build in cushions for cyclical downturns. Companies like Reliance, Tata Steel, and JSW Steel have shown how timely deleveraging can restore investor confidence and drive stock rerating. 

The chart below shows how Tata Steel brought down the debtequity ratio of the company from highs of 2.69 times at the end of FY17 to 0.61 times at the end of FY22 before it reaches 0.99 times by the end of FY25. The increase in the company’s debt-equity ratio was due to the USD 12.1 billion acquisition of Corus Steel in the UK, half of which was funded by a massive debt load of ₹26,580 crore. But as the global financial crisis hit in 2008, demand for steel collapsed, especially in Europe. Meanwhile, cheap Chinese steel flooded global markets and energy costs in the UK kept climbing. A combination of these factors led to deteriorated earnings for the company as most of the revenue was eaten by interest cost. Nonetheless, it was assertive action by CFOs that led the company onto the right track. 

3. Crisis Management Capabilities
Anyone can manage in boom times; true skill shines in adversity. How did the company navigate COVID-19? Did the CFO pre-emptively raise capital, restructure liabilities, or defend margins through cost control? The ability to adapt quickly—without sacrificing long-term goals—is the hallmark of a great CFO. As we saw in the case of Reliance Industries when there was a lot of uncertainty, the CFO managed to raise cash without diluting the balance sheet. Jugeshinder ‘Robbie’ Singh, CFO of Adani Group, played a decisive role in steering the conglomerate through its most turbulent period following the Hindenburg report. 

As the first to publicly counter the allegations, Singh led a comprehensive crisis response combining transparency, financial prudence, and strategic communication to protect both investor interests and the company’s integrity. He not only defended the group’s fundamentals through media and investor outreach but also made bold decisions like pulling the fully subscribed FPO to shield investors from volatility. Singh spearheaded rapid deleveraging—prepaying share-backed loans and scaling back non-essential capex—and personally led global roadshows to assure stakeholders of Adani’s liquidity and resilience. His facilitation of the GQG Partners’ USD 1.9 billion investment was pivotal in reviving market confidence. 

Under intense scrutiny, Singh’s calm, fact-driven approach reassured regulators and prevented a liquidity crisis, allowing operations to continue uninterrupted. His leadership ensured that, despite severe reputational and financial pressure, the group avoided defaults and began regaining stability— emerging not just with its credibility partially restored, but with a stronger financial framework, thanks to Singh’s investorcentric and institutionally sound crisis management. The result was visible in the combined growth in the market cap of Adani group of companies, which increased from a low of around ₹70,000 crore to ₹1,49,000 crore in the next one year. The following chart shows the movement in the combined market cap of Adani Group of companies from February 2023 to January 2024. 

4. Shareholder-Focused Communication
Great CFOs don’t just manage numbers—they communicate them with clarity. Regular, forthright disclosures, earnings commentary that goes beyond clichés, and openness during tough quarters signal integrity. It’s not just what is said—but how it is said—that separates investor-friendly CFOs from the rest. The best example of this is Infosys, the IT behemoth. Historically, we have seen that Infosys has met or exceeded its guidance thanks to its CFOs’ conservative but constructive guidance. Infosys’ fiscal year guidance for 2019 was set at 6 per cent-8 per cent growth with a margin range of 22 per cent-24 per cent, but the company exceeded expectations, reporting 9 per cent growth and a margin of 22.8 per cent. This honesty and pragmatic approach to forecasting—delivering results even beyond the guidance range—was crucial for maintaining investor confidence. In subsequent years, as challenges persisted, the CFO continued to provide realistic guidance, as seen in FY21, when, despite the uncertainty due to the pandemic, the actual growth of 5 per cent still surpassed the revised guidance of 2-3 per cent. Through this transparent communication, the CFO not only demonstrated integrity but also showed that the company was adapting and positioning itself for future growth. By addressing challenges head-on and outlining specific strategies, he helped investors understand the short-term hurdles while reassuring them of Infosys' long-term vision. This approach contributed to maintaining trust and ultimately placed Infosys on a recovery trajectory, leading to strong performance in the following years. 

5. Alignment with Strategy
The CFO must not be in the back seat. In companies where the CFO plays an active role in shaping business direction—like digital pivots, sustainability investments, or vertical integration—the outcomes are often more durable. Strategic CFOs don’t just manage risk; they help the company create value from it. In the case of HDFC Bank, Srinivasan Vaidyanathan, reinvesting in technology and digital banking allowed the bank to capture a larger share of the rapidly expanding digital payments market. 
 

The CFO Scorecard: Decoding Leadership Through Numbers 

How do you spot a high-performing CFO? The answer isn’t in speeches or titles—it’s in the numbers. Here’s how to read them. The modern CFO is a strategic partner, capital allocator, and custodian of shareholder value. While CEOs craft vision, it’s often the CFO who ensures that vision translates into sustainable financial results. But for investors, how do you differentiate between a CFO who’s truly steering the ship versus one simply riding the wave? The answer lies in a handful of key financial metrics that tell a story—of discipline, foresight, and performance. Below, we break down the metrics that reveal whether your portfolio’s CFOs are delivering—or deflecting. 

1. Free Cash Flow (FCF): The CFO’s Financial Breathability
Free Cash Flow reveals how much real cash is left after the business has taken care of its capital needs. Seasoned CFOs know that profits on paper are meaningless without cash in the bank. When you see a company consistently generating positive and growing FCF, it’s a sign the CFO is tightly managing capital expenditures, keeping working capital efficient, and ensuring the business can self-fund its ambitions—be it expansion, dividends, or buybacks. Weak FCF despite strong profits? That’s your red flag. 

Investor signal: Consistent and rising FCF points to strong internal capital discipline and real value creation. 

2. Earnings Per Share (EPS): The Market’s Pulse Point 

EPS may seem like a basic metric, but it holds immense weight in capital markets. High-performing CFOs grow EPS not just through revenue expansion, but by keeping margins tight and equity dilution minimal. They know when to buy back shares, when to raise funds, and how to manage costs smartly. A steady upward EPS trend signals more than profitability—it signals intent. Conversely, EPS that spikes due to one-off gains or buybacks alone may indicate financial window dressing, not strength. 

Investor signal: Stable EPS growth with improving fundamentals is often the work of a hands-on, performanceoriented CFO. 

3. Return on Invested Capital (ROIC): The Value Creator’s Report Card 

ROIC tells you how well the CFO is turning every rupee of capital into profit. A consistently high ROIC—especially one that exceeds the company’s cost of capital—is the ultimate indicator that capital is being deployed with precision. It shows the CFO is making wise calls on where to invest, expand, or even pull back. 

Poor ROIC over time? That’s often the residue of misjudged acquisitions, low-yield investments, or sluggish internal performance. 

Investor signal: ROIC above industry average signals that the CFO knows how to turn capital into compounding returns. 

4. Dividend Payout Ratio: The Balancing Act of Prudence and Reward
A CFO who gets the dividend payout ratio right demonstrates maturity. Too high, and the company may be starving future growth; too low, and it risks alienating loyal income investors. Top CFOs maintain a steady and well-justified payout, adjusting only when business conditions warrant. It’s not about the highest yield—it’s about predictability, stability, and fit within the company’s broader growth trajectory. 

Investor signal: A stable, sustainable dividend payout often reflects a CFO with both foresight and shareholder empathy. 

5. Debt-to-Equity Ratio: The Risk Thermometer 

Debt is a double-edged sword, and wise CFOs know how to wield it. When debt is used judiciously to amplify growth without compromising solvency, it showcases the CFO’s confidence and control. But when leverage balloons without a corresponding rise in returns, it often signals miscalculation—or desperation. Watch for CFOs who reduce leverage during good times and avoid overleveraging even when money is cheap. 

Investor signal: A CFO who keeps leverage stable or trims it while growing the business is worth watching. 

Closing Thoughts: The Silent Strategist Behind Wealth Creation 

As Reliance’s transformation or Adani’s recalibration shows, the CFO is often the unseen architect of shareholder wealth. For investors betting big on India’s corporate champions, tracking the CFO’s moves can offer a sharper lens into the company’s future than any headline e arnings figure. CFOs are uniquely positioned to align financial strategy with business objectives, ensuring resources are allocated efficiently to fuel innovation and expansion while safeguarding profitability. They oversee critical functions such as financial planning, risk management, and compliance, translating complex data into actionable insights for the board, management, and shareholders. For stakeholders, the CFO’s ability to maintain transparency, optimize cash flows, and mitigate risks fosters trust and credibility. For shareholders, the CFO’s focus on maximizing returns through prudent capital management and strategic investments is paramount, as their decisions directly influence stock performance and dividend payouts. In essence, the CFO is the linchpin connecting the company’s vision to its financial reality, ensuring all stakeholders benefit from sustainable growth. Because in the end, while the CEO dreams, it’s the CFO who delivers. 

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