By VestAI Research | Last updated: March 2026
Debt-to-Equity Ratio: Meaning, Definition & Indian Stock Market Examples
Total debt divided by shareholder equity — measures financial leverage.
What is Debt-to-Equity Ratio?
The Debt-to-Equity (D/E) ratio compares a company's total financial debt to its shareholders' equity, showing how much of the business is financed by creditors versus owners. High D/E signals financial risk; low D/E indicates a conservative balance sheet.
Debt-to-Equity Ratio — Indian Stock Market Example
Infosys is virtually debt-free (D/E near 0), as are most large Indian IT companies. Adani Group companies have very high D/E ratios, which drew scrutiny in the 2023 Hindenburg report. Tata Steel typically carries D/E of 0.5–1.5x depending on the commodity cycle.
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What is a safe Debt-to-Equity ratio in India?
For non-financial companies, D/E below 1 is generally considered safe. For capital-intensive sectors (infrastructure, metals), D/E of 1–2 may be acceptable. Banks and NBFCs are highly leveraged by nature (D/E of 5–10x) and should be evaluated using different metrics like NIM and GNPA.
Does zero debt always mean a good company?
Not necessarily. Some companies avoid debt even when they could use cheap leverage to accelerate growth — which may be suboptimal capital allocation. The ideal is manageable debt that funds high-ROCE projects, not zero debt at all costs.
Related Terms
Interest Coverage Ratio
EBIT divided by interest expense — shows ability to service debt.
Return on Capital Employed
EBIT as a percentage of capital employed — measures total capital efficiency including debt.
Free Cash Flow
Operating cash flow minus capex — actual cash available after maintaining business.
PB Ratio
Price divided by book value per share — compares market price to net asset value.
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