For Crisil, In all, there were 460 upgrades and 210 downgrades across sectors in the second half of FY’2023. While the upgrade rate fell 320 basis points from the first half, and stood at 13.46%; however it was still higher than the 10-year average (up to fiscal 2022) of 10%.
CareEdge Ratings’ credit ratio, which measures the ratio of upgrades to downgrades, normalised to 2.72 in the second half after reaching an all-time high of 3.74 in the first half of FY’23. During October-September 22, CareEdge Ratings upgraded the ratings of 383 entities and downgraded the ratings of 141 entities during the period.
For FY ’22, There were only 22 defaults in ICRA’s portfolio in FY2023, compared with 42 in FY2022 and 44 in FY2021. This trend has been consistent with the general improvement witnessed in the asset quality indicators of banks and non-banking finance companies.
“India Inc’s balance sheets have significantly strengthened and gearing levels continue to be decadal low” said Gurpreet Chhatwal, managing director, Crisil Ratings, “ The median gearing of the Crisil rated portfolio is expected be 0.45 time as at fiscal 2024 end, marking a correction from fiscal 2023. This, along with steadfast domestic demand and the government’s unwavering focus on infrastructure spending, has kept the upgrade rate elevated.”
Rival India Ratings upgraded ratings of 295 issuers, representing 21% of the reviewed portfolio. Ratings downgrades were significantly lower, seen in only 78 issuers during the fiscal.
“Among the sectors which witnessed positive rating actions, infrastructure asset operators led the pack. Close to a quarter of the upgrades were from renewable power and road operators” said Suparna Banerji, Associate Director Ind-Ra. These corporates either had their capacities coming online or strengthened their operating performance.Overall, despite the slowdown in the global economy and uncertainties in the financial system, CareEdge Ratings believes that Corporate India has remained relatively resilient. Going forward, CareEdge Ratings expects the credit outlook to be stable, aided by robust growth in domestic demand, deleveraged balance sheets, easing of commodity cost pressures and government’s thrust on infrastructure spending. However, increasing interest rates, prolonged slowdown in global demand, spillovers from the Russia-Ukraine war, inflationary pressures and emerging uncertainties in the global financial system are the key monitorables on the credit risk.