GVK Power & Infrastructure Limited — financial distress indicators
Financial-health summary
GVK Power & Infrastructure Limited's reported numbers place it in the 'Very weak' financial-health band (distress score 80/100). The main indicators are liabilities exceed assets (negative equity), operating profit does not cover interest and revenue collapse. Independently, the Ohlson accounting model puts its 1-year failure probability at 100% and the market-implied (Merton) default probability is 19.7%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Total liabilities are 1.38× total assets.
Balance-sheet insolvency test: debts exceeding the fair value of assets is the statutory definition of net-worth erosion; under the Companies Act 2013 it is a recognised sign of financial sickness.
Interest coverage (EBIT / interest) is -10.12×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Revenue changed -90% year over year.
A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.
Debt is 123% of assets while EBITDA is not positive.
With no operating earnings, repayment depends entirely on asset sales or fresh capital.
O-score 8.65 → model probability 100%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Merton distance-to-default 0.85 σ → PD 19.7%.
Investment-grade issuers typically have 1-year PD well below 1%.
Operating margin fell from 65% to -391% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- High insider/promoter ownership (54%) aligns management with survival.
📰 Recent news scan
- GVK Power & Infrastructure Lower Circuit Streak: Day 2 Price and Data - UnivestGoogle News · 2026-10-06
- GVK Power & Infrastructure (NSE: GVKPIL) Stock in 2026: 5 Signals Investors Should Track From Here - Kalkine IndiaGoogle News · 2026-09-10
- GVK Power & Infrastructure Ltd (GVKPIL) Rises 1.88% to ₹2.17; Holds Above ₹2.06 Support - Retail Driven Moves - https://www.siam.in/Google News · 2026-09-09
- Price Band Hitters | July 23, 2026, 4:00 PM IST - HDFC SkyGoogle News · 2026-07-23
- GVK Power & Infrastructure Confirms Non-Applicability as Large Corporate Under SEBI Framework - scanx.tradeGoogle News · 2026-04-15
⚖️ Indian legal pathway — the IBC, 2016
How insolvency starts
- A financial creditor (§7), an operational creditor after a demand notice (§§8–9) or the company itself (§10) can apply to the NCLT once a default of at least ₹1 crore occurs (§4).
- On admission a moratorium (§14) stops suits and recovery; the board is suspended and an insolvency professional runs the company.
- The Committee of Creditors approves a resolution plan with 66% of voting share (§30(4)) within an outer limit of 330 days (§12); otherwise liquidation (§33) under the §53 waterfall — equity ranks last. Defaulting promoters are generally barred from bidding (§29A).
Earlier warning stages
- RBI's Prudential Framework for Resolution of Stressed Assets (7 June 2019): lenders must review a borrower within 30 days of default and implement a resolution plan, or provide more.
- Listed companies must disclose loan defaults to exchanges under SEBI (LODR); a rating downgrade to “D” is a public signal.
- Auditors must report going-concern uncertainty (SA 570 / Ind AS 1).
Frequently asked questions
What do GVK Power & Infrastructure Limited's financial-health indicators show?
As of 2026-10-09, GVK Power & Infrastructure Limited's public financial data places it in the 'Very weak' band with a distress score of 80/100, driven by liabilities exceed assets (negative equity), operating profit does not cover interest and revenue collapse. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is GVK Power & Infrastructure Limited's financial distress score?
80/100 ('Very weak'). Ohlson O-score 8.65 (model 1-year failure probability 100%). Merton distance-to-default 0.85 σ (model default probability 19.7%).
What works in GVK Power & Infrastructure Limited's favour?
Operating cash flow is positive over the latest 12 months. High insider/promoter ownership (54%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
Under the IBC the Committee of Creditors controls the resolution; the §53 waterfall pays secured creditors and workers first and equity last. In most resolution plans existing shareholders are wiped out or left with a token stake, and the company may be delisted.
Other Utilities & Power companies with distress indicators
- Reliance Power Limited (RPOWER)Weak 58/100
- Energy Development Company Limited (ENERGYDEV)Weak 55/100
- Reliance Infrastructure Limited (RELINFRA)Watch 36/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.