According to CRISIL The rating corporate credit ratio (upgrade versus downgrade) remains high – 5.52 times in the first half of this fiscal (H1-FY23) – underscoring the ongoing broad-based improvement in India Inc’s credit quality. The credit ratio stood at 5.04 times in the second half (H2-FY22) of the previous fiscal.
Three reasons stand out: 1) strengthening domestic demand, Economy expected to grow by 7.3 per cent in the current fiscal; 2) Higher receipts lead to better cash flow; and 3) Continuing the Debt-Light Balance Sheet: capex remains low, Crisil Ratings said.
The credit ratio is in line with the positive credit quality outlook, expressed by CRISIL Ratings earlier – that the upgradation will be much higher than the downgrade during this financial year.
The credit rating was reaffirmed at around 80 per cent of the CRISIL Ratings portfolio, or no change during H1-FY23.
For the rest of the portfolio, what has changed is the upgrade rate, which rose to 16.70 percent, while the downgrade rate was flat at 3.02 percent. In total, there were 569 upgrades and 103 downgrades.
According to the credit rating agency, the performance of advanced companies has improved significantly in the last three financial years despite severe pandemic-related disruptions.
“About 35 per cent of all upgrades were from the infrastructure sector (including large realty players). The infrastructure sector is in a unique position to be a largely domestic story and is generally isolated from global headwinds. Here, upgrades provide better operating cash. inflows, meeting important project milestones and equity investments. The increasing share of central counterparties in infrastructure projects over the years has led to more predictable payment cycles providing additional comfort to credit quality . Gurpreet ChhatwalManaging Director.