Little change in stressed companies: Credit Suisse

While the share of debt was 41% at the quarter ended March, it is now at 38%

Stressed Indian companies are showing some minor signs of recovery, led by improved performance in the power sector and shedding off of stress assets in some firms, according to Credit Suisse.

In a sample of 3,700 companies, having debt of $540 billion, the brokerage finds that the share of debt in companies having interest cover of less than one (meaning whatever be the earnings won’t suffice to pay interest outgo) has improved marginally over the fourth quarter. While the share of debt was 41 per cent at the quarter ended March, it is now at 38 per cent. This is excluding Tata Motors. If Tata Motors is included, the share of debt in such companies would go up to 40 per cent.

“Stress continues to be spread across sectors, with infra and construction, metals and telecom accounting for Rs 50 per cent of the stressed debt,” said Credit Suisse. Profitability of 3,700 companies in the sample, however, fell seven per cent year on year.