Credit Suisse report: No turnaround in India Inc's indebtedness yet

Corporate performance might have seen a slight improvement in the June quarter, however, the number of stressed companies has gone up. According to analysis by Credit Suisse, the share of companies with interest coverage ratio of less than one increased to 39 per cent in June, from 38 per cent in the previous quarter. The share of 'chronically stressed' companies - those with interest coverage (IC) ratio of less than one in the past four of eight quarters - also increased to 33.5 per cent, compared with 32 per cent in the March quarter. IC is the ability of a company to make interest payments on its debt and it is arrived at by dividing earnings before interest, tax, depreciation and amortisation (Ebitda) by interest expense for a particular period. "Our index of corporate health saw a slight deterioration in June 2016 quarter, as the share of companies having IC of less than one increased to 39 per cent (from 38 per cent in Q4) of the sample debt. Our sample of 3,700 listed non-financial firms has an aggregate debt of $500 billion," Credit Suisse said in its report. According to the brokerage, the total debt with companies having interest coverage of less than one stood at Rs 13.5 lakh crore, 39 per cent of the total debt at the end of the June quarter. The share of metal sector in the stressed companies list reduced, while the share of power utilities saw a sharp increase during the quarter.