 "No turnaround in India Inc's indebtedness yet, says Credit Suisse")
Corporate performance might have seen a slight improvement in the June quarter, however, the number of stressed companies have 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 ratio of less than in the past four of eight quarters-- also increased to 33.5 per cent compared 32 per cent in March 2016 quarter.
Interest coverage 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 amortization (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 interest coverage (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 companies has an aggregate debt of $500 billion," Credit Suisse said in a report.
As per the brokerage, the total debt with companies having interest coverage of less than one remain stood at Rs 13.5 lakh crore, 39 per cent of total debt at the end of June quarter. The share of metal sector in the stressed companies list reduce, while share of power utilities saw a sharp increase during the quarter.
"Many large private power companies, including Adani Power, Tata Power, Reliance Infra and Rattan India have again slipped this quarter, says Credit Suisse.
DLF, Jet Airways, Shree Renuka and Bajaj Hindusthan were new additions to the list of companies with poor interest coverage ratio. Companies that exited the list include Tata Steel, NHPC, Tata Communications, Rain Industries, Godrej Industries and United Spirits.
