India Inc credit profiles benefit on high growth in H1, set to improve further

India Inc credit profiles benefit on high growth in H1, set to improve further



High economic growth boosted India Inc‘s credit profile in the first half of FY25, and is set to improve further going ahead, domestic rating agencies said on Tuesday. Crisil Ratings, which rates nearly 7,000 companies, said the ‘credit ratio‘ or the ratio of upgrades to downgrades in its portfolio, improved to 2.75 times in April-September as against 1.79 times in the preceding six months.

The largest domestic credit rating agency saw ratings of 506 companies getting upgraded during the six months, while there were 184 downgrades, officials said.

Its Senior Director Somasekhar Vemuri said the agency has a positive credit outlook on India Inc, led largely by the government’s infrastructure investment and private consumption, which is the driving force for the economic growth estimated at 6.8 per cent in FY25.

Over 38 per cent of the rating upgrades were of infrastructure or related sectors in the April to September period (H1) of FY25, achieved on the back of strong sponsors and lower-than-expected debt, the agency’s Managing Director Subodh Rai told reporters.

Interestingly, if one were to look at the debt weighted credit ratio, which takes into account the underlying outstandings of companies rather than the number of entities, the ratio zoomed to 5.91 in H1 from 1.28 in the preceding six months as the number of upgrades were higher with corporate having larger exposure.


The agency said private sector capital expenditure is set to rise 10-12 per cent in FY25 over the Rs 4.3 lakh crore in FY24 on the back of the headroom that corporates have, courtesy lean balance sheets, possibilities of interest rate cuts and rising capacity utilisation. The capex intensity measured by analysing the actual capital expenditure to operating profits is still moderate at 50 per cent as against the high of 72 per cent seen in FY16 before demonetisation, Crisil said. Over half of the capital expenditure comes from oil and gas refining/marketing, oil and gas exploration and production, primary steel, aluminium, cement sectors, while the infrastructure push from the government is expected to ensure that traditional industries such as cement, primary steel and aluminum continue investing in FY25 and FY26, it said.

On the credit quality outlook, it said the fast moving consumer goods sector is showing positive movement given the expected increase in rural demand, while information technology, cement and fertilisers have moved downwards to ‘favourable’ from ‘strong’ bucket.

The inventory pileup has resulted in auto dealerships getting classified in the moderate bucket from an outlook perspective, while agri chemicals and specialty chemicals are in the neutral bucket, it said.

Meanwhile, its smaller peer Icra Ratings said its credit ratio moved up to 2.2 for the first half of FY25, from 2.1 in FY24 on a benign operating environment, demand buoyancy in select sectors and broader trend of de-leveraging.

It said the borrowing costs have gone up 1.60 per cent since April 2022, yet corporate India has been able to maintain its profile on healthy growth in profits, well-behaved commodity prices and steady demand conditions.

Careedge, another credit rating agency, said its credit ratio moderated to 1.62 times in H1 from 1.92 times in the preceding six months.

“The moderation in the credit ratio can be mainly attributed to the muted performance of the mid & small corporates, especially in export-oriented sectors,” it said, noting that it had 215 upgrades and 133 downgrades.



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