According to reports from The Economic Times, a comprehensive study was conducted to identify companies with exceptional cash conversion ratios. The analysis screened for companies with market capitalisation above ₹5,000 crore and an average CFO-to-EBITDA ratio above 120% over five years to FY26. The resulting top five companies were InterGlobe Aviation (₹1,92,328 crore market cap, 139% ratio), DLF (₹1,59,311 crore, 144% ratio), Bharat Dynamics (₹43,639 crore, 120% ratio), Sobha (₹13,020 crore, 136% ratio), and SG Mart (₹9,468 crore, 367% ratio). The study excluded companies with obvious distortions, including PC Jeweller due to negative EBITDA in some years and Vedanta after validation showed its EBITDA series wasn't comparable with consolidated, post-demerger financials.
As reported by The Economic Times, InterGlobe Aviation demonstrates what investors generally hope to uncover with cash conversion analysis. The airline's business model benefits from passengers paying for tickets immediately, even weeks before flying, allowing the company to receive cash before providing the service or recognising revenue. At March 2026, IndiGo had around ₹6,024 crore of forward sales against trade receivables of only about ₹600 crore. This forward sales structure explains why operating cash flow has regularly run high relative to EBITDA, representing a feature of the business model rather than temporary working-capital release. However, the analysis notes that airlines run large leased fleets, and lease-liability repayments sit under financing rather than CFO, meaning CFO captures upfront customer cash but not all cash the fleet requires.
According to The Economic Times, Bharat Dynamics achieves its five-year ratio through a more uneven route than the other companies. The defence manufacturer receives advances against contracts that are adjusted as missiles and equipment are built and delivered, so customers partly finance execution. Contract liabilities stood at around ₹6,252 crore at March 2026 against ₹5,180 crore a year earlier. However, the company's cash flows show significant year-to-year volatility: FY26 CFO of ₹604 crore with 93% conversion, FY25 CFO of ₹167 crore with 20% conversion, FY24 CFO of ₹412 crore with 46% conversion, FY23 CFO of ₹2,130 crore with 378% conversion, and FY22 CFO of ₹530 crore with 63% conversion. The five-year average works out to about 120%, yet no single year looks like a stable 120% business, with one extraordinary FY23 pulling the average up.
As reported by The Economic Times, SG Mart produces the most dramatic result with a five-year average CFO-to-EBITDA ratio of 367%, which alone would suggest the strongest cash generator in the group. However, the annual numbers tell a different story: FY26 EBITDA of ₹205.8 crore with CFO of ₹258.1 crore (125% conversion), FY25 EBITDA of ₹183.3 crore with negative CFO of ₹391 crore (-213% conversion), FY24 EBITDA of ₹93.5 crore with negative CFO of ₹13.9 crore (-15% conversion), FY23 EBITDA of ₹0.27 crore with CFO of ₹4.39 crore (1626% conversion), and FY22 EBITDA of ₹0.41 crore with CFO of ₹1.27 crore (310% conversion). The spectacular average comes largely from EBITDA being almost negligible in FY22-23, so even a few crore of CFO divided by under ₹1 crore of EBITDA produces an enormous ratio. Additionally, SG Mart was previously Kintech Renewables and underwent a change in control that moved it into trading and manufacturing building materials, so recent operations bear little resemblance to earlier financials.
According to The Economic Times, this study was designed to answer the question of what drives unusually strong cash conversion rather than identify specific investment opportunities. The analysis reveals that each company's cash conversion story differs significantly: IndiGo's advantage is structural, Bharat Dynamics is volatile despite advances, and SG Mart's average is an artifact of a tiny base and a changed business. The report emphasizes that cash conversion works best as an earnings-quality and business-model screen, not a standalone measure of quality. Key factors investors should consider alongside cash conversion include revenue and EBITDA growth, year-wise conversion patterns, working-capital movements, free cash flow, debt and financing requirements, and business changes such as acquisitions or demergers that can make historical ratios incomparable. Understanding cash conversion metrics such as CAC payback period, conversion speed, ARR:CAC, churn, expansion ARR and LTV:CAC can help investors understand how quickly growth turns into cash, how much capital is required to support that growth and whether the model is sustainable.
