The share of “zombie” firms in India’s corporate sector fell to 5.5 per cent in 2025 from 8.1 per cent in 2017, showing that companies are better able to service their debt, according to Dun & Bradstreet’s latest report.
The study looked at around 6,000 listed firms between 2015 and 2025, and labelled a firm “zombie” if its interest coverage ratio (ICR) stayed below 1 for three years in a row, and “stressed” if the ratio dropped below 1 in any single year. ICR is calculated by dividing profit before interest and tax by interest expense.
The combined share of stressed and zombie firms dropped to 14.2 per cent in 2025, down from a peak of 23.5 per cent during the period. About 20.4 per cent of firms that could be assessed had turned into zombies at least once over the decade.
Of the 764 zombie firms whose 2025 status was known, around 55 per cent showed some sign of recovery. The report found 38.9 per cent had fully recovered, 16 per cent had recovered only temporarily, while 32.3 per cent were still zombies.
The median Failure Raw Score stood at 1,388 for recovered firms, versus 1,419 for healthy firms and 1,183 for zombies. A higher score means lower risk of failure.
