Is banking crisis very near in India?

Markets are more insane at two times, near the top and near the bottom. Right now the markets does not look like near the bottom. So we can conclude that the former is a more likely scenario. The recent run-up in Sensex and Nifty has mostly been fueled by two sectors having a big weight in both the indices, Banks and IT. Since IT is something difficult to analyze, I am trying to find the insanity of Mr Market in valuing banks. Consider following companies from BSE500

Company	Debt March 2010	Networth March 2010	EBITDA (TTM)	Interest Payment (TTM)
3i Infotech	1608.1	895.1	274.06	98.97
Aban Offshore	3153.15	2172.93	868.96	336.85
ABG Shipyard	2897.44	1122	503.55	158.96
Adhunik Metallic	1218.49	615.5	273.09	121.61
Adani Enterprises	3471.31	1970.1	489.3	177.57
Alok Industries	8509.68	2716.02	1372.9	606.39
Amtek Auto	3352.51	2592.7	491.24	113.6
Arvind	1870.58	1421.06	341.18	164.71
Bajaj Hindusthan	3075.15	2293.67	630.16	207.38
Bharti Shipyard	2292.8	850.83	329.15	125.38
Dalmia Cement	2850.41	1377.65	417.64	196.13
DLF	12637.86	12830.01	2153.66	949.22
Era Infra	2482.03	1456.59	708.13	271.01
Essar Oil	10353.73	4673.65	1506	1193
Ispat Industries	7351.05	2031.88	1616.95	1017.87
Jaiprakash Associates	17908.71	8500.72	2985.64	1161.84
Jet Airways	13896.98	2641.98	1638.52	1023.88
Kingfisher Airlines	5665.56	-2125.34	-462.73	1247.33
Mercator Lines	1473.47	1053.94	183.03	91.97
Moser Baer	2183.43	1692.02	508.3	183.92

and there are many more like Videocon, SKumars, Rei Agro, Shiv Vani, which makes my fingers tired. We are talking about debts to the tune of more than 2 lakh Crore, which are at stake here. Most of the above companies' net worth are below their debt. All are running highly leveraged business. Interest cover (EBITDA/Interest) has fallen below 4 for most of the companies and are near 2-3 in the latest quarter. This at a time when interest rates in India are at historically low. Just 50% hike in interest rates (i.e. from 7% to say 10.5%) would make it difficult many of the companies to pay their interest. This combined with a hit to profit margins may result a big blow to Indian companies and finally to Indian banks. Be ready for a jolt.

Security analysis does not seek to determine exactly what is the intrinsic value of a given security. It needs only to establish that the value is considerably higher or considerably lower than the market price. - Benjamin Graham