The Business Bytes
New Delhi, October 1, 2024 (TBB Bureau): India Inc’s credit quality has shown significant improvement, driven by resilient domestic growth and continued government policy support, according to leading credit rating agencies.
CRISIL Ratings reported 506 company upgrades in the first half of the current fiscal, compared to 184 downgrades. This resulted in an upgrade-to-downgrade ratio of 2.75, a substantial rise from 1.79 times in the second half of the previous fiscal year.
The annualised upgrade rate stood at 14.5%, exceeding the decade-long average of 11%. Meanwhile, the downgrade rate was 5.3%, well below the 10-year average of 6.5%. Additionally, the rating reaffirmation rate remained stable at 80%.
“Rating upgrades have consistently outpaced downgrades, underscoring resilient domestic growth, bolstered by the government’s ongoing policy support for infrastructure development, rural consumption recovery, and leaner corporate balance sheets,” said Subodh Rai, Managing Director of CRISIL Ratings.
Nearly 38% of the upgrades came from the infrastructure and related sectors. Key factors driving these improvements include acquisitions by strong sponsors, lower-than-expected debt in the renewables sector, reduced project risks as road projects reach critical milestones, strong order execution in construction, and a robust order book in the capital goods sector, Rai explained.
