India's top companies are performing way more than their Chinese competitors and set to outperform them despite the gap in country's infrastructure. Two related reports were published by Standard and Poor (S&P) Global Ratings.
"Our analysis of India's top 200 companies against their Chinese counterparts shows that government influence is far greater for listed companies in China than in India," said Mehul Sukkawala, analysts, S&P Global Ratings credit.
"The government’s influence directly affects companies' flexibility to reduce capital spending, generally results in weaker profitability, and eventually shows up in higher leverage," he added on the basis of analysis.
The difference in the size of the private sectors in India and China is significant. Private entities account for about 75% of net debt and EBITDA (earnings before interest, taxes, depreciation and amortization) of the top-200 Indian companies.
Indian private companies outperform both the Indian government-related entities (GREs) and Chinese companies by registering the highest and relatively stable returns. "Leverage has peaked for Indian companies overall but continues to increase for Chinese GREs," S&P said.