High debt-to-market-cap ratio means trouble and one should steer clear of these 20 companies that are sporting high ratios
29-May-2015 •Vikas Vardhan
When it comes to leverage, debt to equity is the first ratio which is checked. Since the last year the debt condition of many companies, like those in the infrastructure and the capital goods domain, is worsening. The stock market seems to be staying away from them. They have been selling their projects to restructure debt.
Another ratio which measures leverage is the debt-to-market-cap ratio. The debt-to-market-cap ratio over 1 means that the company has more debt than its current market value. Such companies will increasingly find it difficult to raise fresh funds. Also, their stock prices will remain in check. We checked the debt-to-market-cap ratio of the BSE 500 companies and found that it is at a record level. Following is the list of top 20 companies with the highest debt-to-market-cap ratios.
| Company Name | Net Worth (₹cr) | Debt (₹cr) | Market Cap (₹cr) | Debt to Market Cap |
| Lanco Infratech | 1440 | 36705 | 1199 | 30.61 |
| Bhushan Steel | 9058 | 35224 | 1287 | 27.38 |
| Alok Industries | 3448 | 20012 | 986 | 20.29 |
| Gitanjali Gems | 3944 | 8484 | 435 | 19.5 |
| GVK Power & Infrastructure | 2778 | 22613 | 1292 | 17.5 |
| Jaiprakash Associates | 10074 | 73162 | 4305 | 16.99 |
| Jaiprakash Power Ventures | 6345 | 28066 | 2092 | 13.42 |
| MTNL | 5043 | 14216 | 1077 | 13.2 |
| IVRCL | 1948 | 8334 | 650 | 12.83 |
| Shree Renuka Sugars | -498 | 9560 | 1056 | 9.05 |
| Punj Lloyd | 2232 | 6862 | 812 | 8.45 |
| Videocon Industries | 4698 | 40212 | 5016 | 8.02 |
| Orchid Chemicals & Pharma | 380 | 3414 | 428 | 7.98 |
| KSK Energy Ventures | 2873 | 15134 | 2025 | 7.48 |
| ABG Shipyard | 1376 | 5462 | 775 | 7.04 |
| Ballarpur Industries | 2297 | 6144 | 911 | 6.74 |
| Usha Martin | 1990 | 3732 | 576 | 6.48 |
| Aban Offshore | 3846 | 14561 | 2312 | 6.3 |
| Rain Industries | 2946 | 7673 | 1298 | 5.91 |
| GMR Infrastructure | 6086 | 45041 | 7642 | 5.89 |
