Companies listed in the small and medium enterprise (SME) segment have significantly decreased leverage amid rising profitability.
The debt/equity ratio of 0.5 in FY24 is the lowest since at least FY18, shows a Business Standard analysis of data covering 183 listed SME companies with numbers available for at least seven years.
The SME segment only provides financial statements twice a year, compared to four times for listed companies.
The analysis here is based on the latest available FY24 results.
The companies in the sample had a debt/equity ratio of 0.9 in FY18. These were compared to a sample of 152 companies from the BSE 200 index comprising some of India's largest firms. Banks and finance sector companies were excluded from both. The BSE 200 companies saw their debt/equity ratio decline from 0.7 to 0.6 during the same period, suggesting a sharper decline for the SME segment.
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