Stocks to buy: Invest in companies that have reduced debt; 5 stocks with up to 29% upside potential
Bank of Baroda.
Though the ICR was comfortable despite moderation, the higher base effect is likely to keep profit growth under pressure. This is distressing as profits are the main driver of the debt servicing ratio. ICR measures a company’s debt servicing capability and indicates whether the company is making enough profits to meet its interest liabilities.
Moreover, the sectors that contributed significantly to top line or revenue growth in 2023-24 saw a slowdown in the June quarter. These sectors included automobiles, consumer services, airlines, industrials and cement. “The demand slowdown is a sign of worry,” states the Nuvama report.
Looking at the debt profile of India Inc., the aggregate total debt (long term and short term) of 2,300 nonfinancial companies (with market cap greater than Rs.100 crore) stood at Rs.46.3 lakh crore at the end of 2023-24 and grew at 3.96% year-on-year (y-o-y), according to the data compiled from Reuters-Refinitiv. In absolute terms,Reliance Industries, Vodafone Idea, NTPC, Bharti Airtel and ONGC were the biggest five companies in terms of total debt in 2023-24. Energy, utilities and industrials were among the sectors with the most total debt in 2023-24. In terms of growth, construction materials, real estate and chemicals were among the sectors that saw the most y-o-y growth in total debt between 2022-23 and 2023-24. While the key equity market benchmarks continue to climb, experts are advising caution due to the emerging headwinds.
Mixed global signals, amid the uncertainty
