5,000 crores in new debt means that company has to pay interest expense of around Rs.500 crores (@10% interest). This will reduce the net income and hence price per share.
Feb 09 2013 09:46 AM
This is not always the case. If the debt is used to invest in high ROI projects then the net income will increase even after the interest payments and share prices will go up. So new debt is not always a bad thing.