Data Drive: Firms lower leverage

Private manufacturing companies have reduced their leverage as both debt-to-equity and debt-to-asset ratios have eased to 35% and 19.5%, respectively, in H2FY22 from the peak of 45.8% and 22.7% in H2FY20.

Moreover, companies are preferring to hold on to cash as the share of cash holdings-to-total-assets has risen to 5.1% in H2FY22 from 3.6% in H2FY20, data from RBI show.

The declining share of fixed assets in total assets indicates that the capex cycle is subdued and companies are not investing in capacity expansion or commissioning new projects.

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