Strategic Leverage and Its Influence on the Valuation of FMCG Companies

DOI: https://doie.org/10.10399/APER.2025284017

Authors:

Dr. Madhu Ruhil, CA Rohit Kumar, Dr. Aarti Suryavanshi, Dr. Latika Malhotra

Keywords:

Capital structure, Financial leverage, Firm valuation, Panel Data.

Abstract:

and market valuation. This investigation explores the key factors influencing leverage and its impact on firms operating in the Fast-Moving Consumer Goods (FMCG) sector in India. By analysing the financial structures of leading FMCG companies, the research aims to identify optimal leverage strategies that support sustainable growth and enhance shareholder value.

The study reviews contemporary theories and empirical evidence on financial leverage, considering industry-specific dynamics that shape capital structure decisions in the FMCG sector. Despite the sector’s stable demand and growth prospects, effective management of leverage remains essential to mitigate financial risk and improve market performance.

Using a quantitative research design, data is collected from the CMIE database. Panel data analysis is employed to assess the relationship between leverage and firm valuation. The findings provide strategic insights for corporate managers, investors, and policymakers, contributing to informed financial decision-making and capital structure optimization within the FMCG industry.

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