InvestorQ : Has the stress on Indian banks reduced after the opening up of the economy post the pandemic?
ishika Banerjee made post

Has the stress on Indian banks reduced after the opening up of the economy post the pandemic?

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7 months ago
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In fact, this is exactly the point that has been made by a recent report by Credit Suisse, one of the most reputed India research houses for equities. According to the report, stressed debt of Indian corporates came down sharply since the phased opening up of the economy.

Just to give you an example, the proportion of debt in loss making companies is down from 30% to 23%. That is a sharp fall in a short span of time. This is largely driven by improved economics of companies like Tata Steel, SAIL and Bharti Airtel; where profits are visible.

There is one more positive feature. The share of stressed debt in companies with interest coverage below one; dropped to the lowest in five years. In terms of valuation support, this could be accretive for banks as also for other financial asset-based players.

However, the Credit Suisse report has pointed out that there still are companies like Vodafone, Tata Motors, Adani Power, Alok, GMR and MTNL contributing substantially to the stress to the banking system as a whole.

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