Credit ratios stay robust in H1FY23: Rating agencies CRISIL, ICRA

Reflecting an improving corporate profile, the credit ratio, which is ratings upgrades against downgrades, stayed high at 5.52 in the first half of FY23 from 5.04 in October-March FY22, according to CRISIL.

Strengthening domestic demand, higher realisations leading to better cash flows, and continuing debt-light balance sheets across sectors pushed up the credit ratio.

The credit outlook remains positive. Backed by an economic upturn, domestic demand is expected to be resilient. Plus, the impetus of the government’s infrastructure expenditure augurs well for companies, rating agencies said.

However, persistently high inflation, increases in interest rates, and a slowdown in large economies remain risks.

The performance of the upgraded companies improved significantly over the past three fiscal years despite pandemic-related disruptions.

This is reflected in the median expected growth in earnings before interest, depreciation, tax, and amortisation at a three-year compound annual growth rate of 25 per cent for them. This is much better than the 12 per cent expected for the rest of the portfolio.


ICRA said the credit quality of India Inc. continued to strengthen in H1FY23, carrying on with the momentum set in motion since the beginning of FY22.

For ICRA, in H1FY23, as also in FY22, the number of ratings upgrades was more than three times that of the downgrades. It was 2.8 times in the first half of FY22.

CRISIL said 13 sectors, accounting for 18 per cent of the rated debt, were the most buoyant with robust balance sheets.

Their operating cash flows are expected to grow over 10 per cent in FY23 year-on-year, which is higher than other sectors.

These include hospitality, airport operators, industrials, and marine ports.

While the trend of a higher credit ratio is likely to continue in the second half of FY23, global headwinds and high inflation may adversely impact exports in sectors like textiles, pharma, and information technology.

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