Private sector firms continue to maintain high interest cover ratio

India Inc maintained its high interest cover ratio (ICR) for FY25 which has been on an upward trajectory since the cessation of Covid-19. The ICR - defined as the ratio of profit before interest and taxes to interest payments – stood at 6.78 in FY25, up from 3.77 in FY20. A one-off positive blip was noticed in FY22 when it increased to 6.94 (due to non-business related income).   

 

The ICR has been headed northwards despite the sharp increase in interest rates with the Reserve Bank of India increasing the repo rate to 6.5 per cent till