Changing Patterns of Capital Structure in Indian Companies: An Empirical Longitudinal Analysis of NIFTY 50 (2016–17 to 2025–26)

Abstract Capital structure represents a vital component of corporate financial decision-making because it determines the relative use of debt and equity in financing business activities. Changes in macroeconomic conditions, interest rate cycles, industry-specific risks, profitability, and corporate expansion strategies heavily influence financing choices. This study examines the changing patterns of capital structure among leading Indian listed companies using the NIFTY 50 index constituents as a fixed sample over a ten-year period from 2016–17 to 2025–26 (500 firm-year observations). Secondary financial data were extracted from consolidated financial statements on Screener.in and annual disclosures. Key indicators—including the Debt–Equity Ratio (DER), Debt-to-Assets Ratio (DAR), Equity-to-Assets Ratio (EAR), Profitability, Firm Size, and Asset Tangibility—were rigorously analyzed using descriptive statistics, Compound Annual Growth Rates (CAGR), one-way ANOVA, Pearson correlation, and panel regression models. The empirical findings reveal that over the study period, the grand average Debt–Equity Ratio stood at 0.84 (median: 0.46), while the average Debt-to-Assets Ratio was 24.03%. Aggregate total corporate borrowings grew at a CAGR of 8.68%, whereas total equity expanded at a CAGR of 10.04%. ANOVA testing indicates no statistically significant change in average leverage over time across the 10 years (p = 1.000), but confirms highly statistically significant structural variation across industry sectors (F = 100.22, p < 0.0001). Non-bank financial services and aviation exhibit the highest leverage, whereas FMCG, IT, and defense capital goods maintain near-zero debt policy. Regression analysis confirms that firm profitability is inversely related to leverage, validating the Pecking Order Theory in the Indian corporate landscape.