Nifty Companies’ Debt Jumps The Most In Five Years
The total debt of 35 Nifty constituents rose 13.4 percent year-on-year to Rs 16.3 lakh crore—the highest jump since 2013-14. (Photographer: Manaure Quintero/Bloomberg)

Nifty Companies’ Debt Jumps The Most In Five Years

The debt of Nifty 50 companies, barring financial services providers, jumped the most in five years in the fiscal ended March.

There are 39 Nifty constituents, excluding banks and non-bank lenders. Of these, four are debt free. The total debt of the remaining 35 rose 13.4 percent year-on-year to Rs 16.3 lakh crore, according to Bloomberg data. That’s the highest jump since 2013-14.

Nifty Companies’ Debt Jumps The Most In Five Years

About Rs 1.47 lakh crore or 77 percent of the increase in debt was led by Reliance Industries Ltd., NTPC Ltd., Indian Oil Corporation Ltd., UPL Ltd. and Bharti Airtel Ltd. Their combined leverage ratio worsened to 4.1 times from 3.4 times in 2017-18.

Still, the overall total debt-to-Ebitda remained stable at 2.42 times in the 12 months ended March. The cash balance of the Nifty companies increased Rs 39,000 crore year-on-year, of which nearly 44 percent came from Wipro Ltd. and Tata Consultancy Services Ltd.

Here’s a look at the five companies that contributed the most to India Inc’s overall debt:

Reliance Industries

Reliance Industries’ debt jumped the most in at least nine years in 2018-19 even as the nation’s most valuable company hived off its tower and fibre assets. Total debt of the oil-to-telecom conglomerate rose to Rs 2,71,942 lakh crore, Bloomberg data showed. That’s on account of higher capital expenditure at Rs 1,32,500 crore.

But the company has been able to maintain its leverage ratio due to greater contribution from consumer and petrochemicals business. Still, the Mukesh Ambani-led company makes up for 16.7 percent of the total debt held by the Nifty companies in the last financial year.

Also read: Reliance Industries Contributes The Most To Nifty’s Debt

Nifty Companies’ Debt Jumps The Most In Five Years

Also read: Dear Reliance Industries, Please Explain This Valuation Gap

NTPC

The state-owned power generator’s debt jumped 24.6 percent—the highest in at least nine years—on account of rising capital expenditure, acquisition of Barauni thermal power plant and higher working capital because of advances to suppliers. The rise in debt, coupled with lower operating profit in FY19, increased the company’s leverage ratio to 7.7 times—the highest since financial year 2010, according to Bloomberg data. Its operating profit was lower due to a one-time reversal of revenue related to previous years.

Nifty Companies’ Debt Jumps The Most In Five Years

Indian Oil

The debt of India’s largest fuel retailer increased because of unpaid dues from the government, higher payouts to shareholders and rising capital expenditure. That, along with lower operating profit, led to a rise in Indian Oil’s leverage ratio to 2.6 times.

Nifty Companies’ Debt Jumps The Most In Five Years

UPL

The pesticides maker’s debt rose by more than Rs 22,000 crore after it acquired Arysta LifeScience Inc. last year for $4.2 billion to become one of the world’s largest crop protection companies. Its leverage also rose to seven times.

Nifty Companies’ Debt Jumps The Most In Five Years

UPL Ltd., however, expects to retain its investment grade rating and targets to lower its leverage to below 2 by the year ended march 2021, the management said in a conference call after the fourth-quarter earnings.

Also read: Q4 Results: UPL’s Profit Plunges As Arysta Deal Brings Exceptional Loss

Bharti Airtel

The debt of India’s second-biggest telecom operator increased due to higher capital expenditure and competition in the industry that led to lower profits. It pushed up Bharti Airtel’s leverage to its highest ever of 4.9 times in 2018-19.

Nifty Companies’ Debt Jumps The Most In Five Years

Since then, the company, however, has raised about Rs 25,000 crore via a rights issue to lower its debt. It’s also considering several other options to reduce its debt.

Also read: Bharti Airtel Plans London IPO for Africa Unit to Cut Debt

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.