Financial Turnaround through Debt Restructuring: Evidence from Indian Corporates

DOI: https://doie.org/10.10399/APER.2026541754

Authors:

Dr Chitra Gounder, Mahendra Daima, Kinjal Shah

Keywords:

Debt Restructuring; Firm Valuation; Investor Sentiment; Market Capitalisation; Enterprise Value; India.

Abstract:

This paper examines the impact of debt restructuring on firm valuation, investor sentiment, and capital structure using firm-level evidence from three major Indian corporates — Suzlon Energy Ltd., DLF Ltd., and Tata Steel Ltd. Covering the period 2013–2025, the study combines trend analysis of stock prices, market capitalisation, enterprise value and debt, with firm-specific regression models to assess how restructuring influences financial outcomes and market perception. The results show that debt restructuring plays a significant role in restoring financial stability and improving market valuation, although its effectiveness varies across firms and industries. Aggressive deleveraging through debt–equity conversion and capital infusion as in Suzlon leads to rapid recovery in valuation and strong investor response, while asset monetisation and equity infusion as in DLF generate steady valuation growth. Refinancing and maturity extension as in Tata Steel improve liquidity and stability but produce more moderate valuation gains due to cyclical industry conditions. Regression results consistently show a strong negative relationship between market capitalisation and total debt and a positive relationship between enterprise value and total debt, highlighting the interaction between leverage and valuation measures. The findings suggest that debt restructuring enhances long-term investor confidence and firm value when supported by favourable industry conditions, credible execution, and transparent communication, while short-term volatility remains influenced by macroeconomic and sectoral factors.

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