By Bl Mumbai Bureau

Copyright thehindubusinessline

Indian corporates continued to maintain a robust credit ratio, which reflects the proportion of rating upgrades to downgrades in H1FY26, rating agencies said today.

CareEdge Ratings’ credit ratio rose to 2.56 times in H1FY26 from 2.35 times in H2FY25. There were a total of 282 rating upgrades and 110 downgrades in the first half of current fiscal. Reaffirmations remained largely stable at 80 per cent over the past three years, indicating that most ratings continued to hold strong despite changing external environment.

“Corporate India’s leverage is at decadal lows, reflected in the Total debt/PBILDT of close to 1.63 times as of Mach, 2025, which was at 3.07 times as of March, 2016. Steady domestic demand and the government’s infrastructure push sustained upgrade momentum, with nearly 40 per cent of all upgrades linked to infrastructure,” the rating agency said. Yet, the gains were not universal. Small-sized auto ancillaries and dealers, chemical manufacturers, small finance banks (SFBs) and NBFCs exposed to microfinance and unsecured business loans bore the brunt of challenges, emerging as the sectors with the highest downgrades amid pricing pressures and asset-quality concerns.

ICRA Ratings, meanwhile, upgraded the ratings of 214 entities while downgrading 75 in H1FY26, resulting in a robust credit ratio of 2.9. This marks a significant improvement over the credit ratio of 2 in FY25 and 2.2 in H1 FY2025.

Significant challenge

K Ravichandran, EVP & chief rating officer at ICRA, said that the imposition of 50 per cent tariff on Indian exports to the US presents a significant challenge for exporters, particularly in sectors such as cut & polished diamonds (CPD), textiles, and seafoods, which are heavily reliant on the US market. However, domestic consumption is likely to receive a boost from GST rate rationalisation, income tax relief, transmission of rate cuts, and easing food inflation, particularly aiding urban demand, which has seen uneven recovery thus far.

Crisil Ratings’ credit ratio stood at 2.17 times in the first half of this fiscal, moderating from 2.75 times in the first half of last fiscal. Overall, there were 499 upgrades and 230 downgrades during the period. The reaffirmation rate stood at 80 per cent for the first half of this fiscal, underscoring the resilience of corporates. While upgrades were broad-based, the infrastructure and related sectors, such as construction and engineering, roads, renewables, capital goods and secondary steel were at the forefront.

Published on September 30, 2025