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Rising interest rates may affect these 10 firms with high promoter pledging, debt to equity ratio

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Pledging of shares is like a double-edged sword. In a slowing economy or a bear market, the pledging could create havoc with promoters’ cash flows. Historically, during economic slowdown, earnings of companies tend to decrease due to a fall in the aggregate demand. During the period of rising interest rates, cost of debt for the firms increases significantly and this scenario could create problems for the companies with high debt. Here are 10 companies based on high promoter pledging and high debt to equity ratio in the BSE.

The data available with Ace Equity, CMIE Prowess and BSE showed that in FY 22, the Mumbai based multinational mining giant Vedanta has 99.99 per cent of promoters’ stake pledged to financial institutions, coupled with considerable high debt to equity ratio of 0.98 per cent. The company reported Rs 64,102 crore total debt. However, Vedanta also earned Rs 23,709 crore net profit in the financial year and has a comfortable interest coverage ratio of 7.9 times.

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Wind turbine manufacturer Suzlon Energy has 88.54 per cent promoters’ stake pledged and debt to equity ratio of (- 1.7) times. It has Rs 6390.6 crore total debt and posted a net loss of Rs 166.2 crore in FY 22.

Sundaram-Clayton, the Automobile & Ancillaries maker, has 86.92 per cent promoters’ stake pledged and debt to equity ratio of 3.16. The company has Rs 16029.9 crore total debt while it earned Rs 821 crore net profit.

Iron & steel sector firm Jindal Stainless has 78.07 per cent promoters equity pledged and total debt to equity ratio of 0.60 times. It has Rs 3125.7 crore total debt while it earned Rs 1806.4 crore net profit in the financial year.

Promoters of Strides Pharma Science have pledged their 62.20 per cent shares. The healthcare company has total debt to equity ratio of 1.18 times. The company has Rs 2791.96 crore total debt and posted a net loss of Rs 363.4 crore in FY 22.

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Kalpataru Power Transmission has 52.03 per cent promoters stake pledged and a debt to equity ratio of 0.87 times. The company has Rs 3708.9 crore total debt and posted a net profit of Rs 555 crore in FY’22.

IRB Infrastructure Developers’ promoters have pledged their 49.12 per cent equity stake and has debt to equity ratio of 1.27 times. The company has Rs 15929.8 crore total debt while it earned Rs 587.6 crore net profit in FY 22.

Wockhardt has 47.84 per cent ownership pledged and debt to equity ratio of 0.49 times. The pharma company has Rs 1862 crore total debt and posted a net loss of Rs 279 crore in FY 22.

Major aviation player SpiceJet has 44.24 per cent promoters’ stake pledged and a debt to equity ratio of (-0.41) times. Spicejet  has Rs 1067.9 crore total debt and reported a net loss of Rs 1744.3 crore in FY 22.

Sterling and Wilson Renewable Energy has 39.50  per cent promoters’ ownership pledged and debt to equity ratio of 0.48 times. The company has Rs 435 crore total debt and reported a net loss of Rs 915.8 crore.

Adani Power‘s promoters have pledged 25.33 per cent stake and has a debt to equity ratio of 2.61. The company reported Rs 48795.7 crore total debt. However, Adani power earned Rs 4911.6 crore net profit in FY 22..

Dilip Buildcon‘s promoters have pledged 24.99 per cent equity stake and firm has a debt to equity ratio of 2.47 times. Dilip Buildcon has Rs 8783.2 crore total debt and reported a net loss of Rs 549.7 crore.

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