India Inc earnings signal end of deleveraging cycle as borrowings rise

The corporate balance sheet deleveraging cycle that started after the breakout of the Covid-19 pandemic came to a halt in the first half of 2022-23 (FY23) as companies stepped up borrowings, worsening their financial ratios.

The combined gross borrowings of the 760 companies excluding banking, finance, insurance and stock-broking firms were up 12.2 per cent year-on-year (YoY) during April-September 2022 (H1FY23), growing at the fastest pace in three years (or six half-yearly periods). In comparison, these companies’ combined operating profit, or Ebitda (earnings before interest, taxes, depreciation, and amortisation), was down 0.4 per cent YoY; interest expenses were up 12.5