Vodafone Idea topped the charts on interest costs with an 11.3% rise at Rs 23,354 crore, followed by RIL with Rs 19,571 crore, while Bharti Airtel came in third with Rs 19,300 crore.
The debt of Indian corporates soared to an all-time high of Rs 36.63 trillion in FY23, a 12.6% rise over the amount recorded in the previous financial year, while borrowing costs rose 19% to Rs 2.51 trillion. This comes on the back of higher capex as companies bet on a rebounding economy and rising demand. Crisil estimates India Inc’s capex will grow 12-14% to Rs 6 trillion in FY24 as corporates add capacity.
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The combined debt in FY22 stood at Rs 32.53 trillion, interest costs at Rs 2.10 trillion, according to data sourced from Capitaline. The data is based on a sample of 406 companies from the BSE 500, excluding banks, finance and insurance firms.
Shree Cement MD Neeraj Akhori told FE that India is witnessing one of the most confident periods with the acceleration of demand drivers and increased economic activity. “The rise of debt demonstrates strong intent for future preparedness, both in terms of meeting larger order flows and capacity expansions. I am sure individual firms will continue to put risk management as a critical part of their business plans,” Akhori said.
Geojit Financial Services executive director Satish Menon said the rise in debt was propelled by rising private capital expenditure, and the consolidation of the stock market in the later period of FY23 may have led to a higher reliance on debt funding. He added that the profits of companies were growing well and needed to be supported by the expanding balance sheet.
Menon said he did not anticipate an issue with the rise of corporate debt because companies’ balance sheets were lean and cash flows generation was strong. “The interest rate cycle has reached its peak and as interest rates normalise we anticipate an improvement in interest coverage,” he added.
According to Mahesh Singhi, founder & MD at investment banking firm Singhi Advisors, the rise in debt, particularly long-term debt, indicates that companies have started expanding capacity as they expect a rise in order inflows.
Karan Gupta, director-financial institutions at India Ratings and Research, said some of the rise in debt was due to working capital while some was on the term-loan side. “There are no concerns on asset quality at the moment, especially on the corporate side. Given the healthy deleveraging, this is only the start of some leverage coming back into specific sectors,” he added.
Gupta said the rise in debt was reflected in the credit growth. “We have just finished FY23 at around 16.5% credit growth and we are set for around 13-14% growth this year,”he said.
Reliance Industries (RIL) topped the charts with a gross debt of Rs 3.35 trillion, an 18.9% rise from Rs 2.82 trillion recorded in FY23. Vodafone Idea came in second with a debt of Rs 2.38 trillion, followed by Bharti Airtel (Rs 2.26 trillion), NTPC (Rs 2.22 trillion) and Indian Oil Corporation (Rs 1.49 trillion). Oil and Natural Gas Corporation (Rs 1.42 trillion), Tata Motors (Rs 1.34 trillion), Power Grid Corporation (Rs 1.27 trillion), Larsen & Toubro (Rs 1.20 trillion) and Grasim Industries (Rs 1.03 trillion) were others in the top 10.
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Vodafone Idea topped the charts on interest costs with an 11.3% rise at Rs 23,354 crore, followed by RIL with Rs 19,571 crore, while Bharti Airtel came in third with Rs 19,300 crore.
