The formula
Debt-to-Equity = Total Debt ÷ Shareholders' Equity. A ratio of 1.0 means a company owes as much as its owners have invested; 0.3 means it's mostly equity-funded. It's sometimes quoted as a percentage (50%) rather than a ratio (0.5) — same thing, just confirm the form before comparing.
How to read it
Higher leverage magnifies both gains and losses and adds fixed interest costs the company must pay regardless of how business is going. But what counts as “high” depends heavily on the sector — IT and FMCG run near zero, while infrastructure and power routinely run above 1.0 by nature.
A high but stable, well-covered D/E is usually fine. A moderate but rapidly rising one is often the earlier warning.
For the full sector-by-sector breakdown, see our guide on what a good debt-to-equity ratio looks like for Indian stocks.