New Delhi. Ratings agency CRISIL Ratings said on Monday that India’s corporate credit quality remained strong in the first half of the year. A strong balance sheet is expected to position India Inc well, even as global uncertainty persists, the rating agency said.
According to Crucial Ratings, the corporate credit ratio (upgrade vs downgrade) is 5.52 times higher in the first half of the current fiscal year (H1-FY23). This reflects the continued improvement in the credit quality of Bharat Inc. In the second half of the previous financial year (H2-FY22), the credit ratio was 5.04 times.
Upgrades during this financial year are more than downgrades.
The credit ratio is in line with the positive credit quality outlook expressed earlier by CRISIL Ratings. The rating agency had said that the upgrade would be more than the downgrade during this financial year.
Improved performance of upgraded companies in last 3 financial years despite pandemic
The rating agency highlighted 3 factors that are driving domestic demand. The reasons are – the economy is expected to grow at a rate of 7.3 percent this fiscal, higher receivables for better cash flow and a debt-light balance sheet capex to stay low. Despite severe pandemic-related disruptions, the performance of the upgraded companies has improved significantly over the last three financial years.
Gurpreet Chhatwal, Managing Director, Crucial Ratings, says, “Around 35% of all upgrades were from the infrastructure sector (including major realty players). The infrastructure sector is in a unique position to be a domestic is the story and far from the global situation in general. The upgrade here has been driven by improved operating cash flows, completion of key project milestones and equity infusions. The increased exposure has led to a more predictable repayment cycle to provide additional comfort to credit quality.
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First Publication: 03 October 2022, 18:21 IST