Mumbai, April 1
Despite global headwinds, the credit ratio for India Inc strengthened in the second half of FY25 — improving to 2.35 times from 1.62 times in H1 FY25, a CareEdge Ratings report said on Tuesday.
The upgrade rate increased to 14 per cent from 12 per cent in the first half of last fiscal (FY25), driven by sectors that benefited from strong domestic consumption and government spending.
Meanwhile, the downgrade rate dropped 200 bps to 6 per cent, driven by asset quality concerns in NBFCs catering to microfinance and unsecured business loans, alongside pricing pressures faced by small-sized entities in the Chemical and Iron and Steel sectors, as well as export-focused Cut and Polished Diamond players.
According to Sachin Gupta, Executive Director and Chief Rating Officer, CareEdge Ratings, the boost in credit ratio is a testament to the resilience of India Inc.
“However, the journey ahead is far from smooth. The imposition of US tariffs could disrupt momentum for export-driven sectors, particularly those reliant on discretionary spending, while also sparking intense price competition from other affected economies,” he mentioned.
That said, not all is bleak as trade agreements and rupee depreciation could offer much-needed relief to exporters.
At the same time, Corporate India’s strong, deleveraged balance sheets act as a sturdy shield against external volatility,” he added.
CareEdge Ratings’ credit ratio for the manufacturing and services sector has seen a notable rebound, with its credit ratio rising from 1.21 in H1 FY25 to 2.06 in H2 FY25.