Over Half Of Top 500 Firms Could Face Liquidity Crisis

Data show that 257 companies do not have enough cash to meet their fixed costs and interest

- Lalatendu Mishra

Over half of the top 500 companies listed on the National Stock Exchange could find themselves strapped for cash to even make routine payments in the aftermath of the COVID-19 induced lockdown.

Some strong companies such as Reliance Industries ( ₹1,53,719 crore of cash and cash equivalents as of December 31, 2019), Inter globe Aviation (₹20,068 crore) and Bajaj Auto ( ₹17,407 crore), to name just three, will obviously ride through the crisis comfortably. But a majority of the firms could find themselves in liquidity trouble, unless if promoters step in with equity or banks lend to them.

As per data analysed by Acuite Ratings & Research Ltd. exclusively for The Hindu, out of 467 of the top 500 NSE-listed companies, excluding banks, 257, or 55% of them, have less than 100% cushion for bearing fixed and debt-servicing costs.

In other words, they will need additional funds through debt or equity to maintain their operations or have to cut back on their existing costs.