AN EMPIRICAL ANALYSIS OF FINANCIAL LEVERAGE AND FINANCIAL PERFORMANCE IN SELECTED INDIAN STEEL COMPANIES

Abstract

Financial leverage plays a crucial role in shaping a company's capital structure and determining its financial sustainability, especially in capital-intensive industries like steel. This study empirically investigates the relationship between financial leverage and financial performance in selected Indian steel companies. The research is based on a five-year financial dataset from 2020–21 to 2024–25 for two leading steel companies: JSW Steel Ltd and Tata Steel Ltd. The analysis focuses on key financial indicators such as Net Profit Margin, Return on Assets, and Total Debt-to-Equity Ratio to assess both profitability and leverage strategies adopted by these firms. The findings reveal that while there is no significant difference in net profit margin and return on assets between the two companies, there exists a statistically significant difference in their total debt-to-equity ratios, suggesting contrasting approaches to financial leverage. The study contributes to the understanding of how capital structure choices influence firm performance in capital-intensive sectors like steel. It offers valuable insights for financial analysts, investors, and corporate managers seeking to evaluate risk, return, and financial sustainability in the Indian steel industry.