India Zombie Firms Share Drops Sharply in 2025 Report
- The share of distressed and financially struggling companies in India’s corporate sector has dropped sharply as more firms improve their debt-servicing capacity, according to Dun & Bradstreet’s latest...
- The research methodology classifies a company as a "zombie" if its interest coverage ratio (ICR) stays below 1 for three years in a row.
- Out of all assessed companies, about 20.4 percent turned into zombies at least once during the ten-year window.
The share of distressed and financially struggling companies in India’s corporate sector has dropped sharply as more firms improve their debt-servicing capacity, according to Dun & Bradstreet’s latest report. Data from the study show that the share of “zombie” firms fell to 5.5 percent in 2025, down from 8.1 percent in 2017. Dun & Bradstreet evaluated approximately 6,000 listed firms between 2015 and 2025 to track corporate financial health across the decade.
Defining Zombie and Stressed Firms in India
The research methodology classifies a company as a “zombie” if its interest coverage ratio (ICR) stays below 1 for three years in a row. A firm is labeled as “stressed” if the ratio drops below 1 in any single year. The interest coverage ratio is calculated by dividing profit before interest and tax by interest expense. Over the decade-long study period, the combined share of stressed and zombie firms dropped to 14.2 percent in 2025, falling from a peak of 23.5 percent.
Corporate Recovery Trends Across Listed Companies
Out of all assessed companies, about 20.4 percent turned into zombies at least once during the ten-year window. For the 764 zombie firms whose 2025 financial status was definitively known, roughly 55 percent demonstrated signs of recovery. The report notes that 38.9 percent of those firms fully recovered, while 16 percent managed only a temporary recovery. Meanwhile, 32.3 percent remained classified as zombies. Risk metrics in the study also highlight the financial distinction between recovered entities and persistent zombies. The median Failure Raw Score stood at 1,388 for recovered firms, compared to 1,419 for healthy firms and 1,183 for zombies, where a higher score indicates a lower risk of financial failure.
