India Inc rating upgrades continue to outnumber downgrades

The number of ratings upgrades of companies continued to outnumber downgrades in the country in the first half of FY24 despite a sequential moderation in credit ratio amidst a global slowdown, CareEdge Rating has said. The ratings company upgraded 217 companies and downgraded 130 companies in six months ended September.

The credit ratio - that is, the ratio of upgrade to downgrade - decreased sequentially to 1.67 in the first half of FY24 from 2.72 in the second half of FY23. The credit ratio, though, is slightly higher than its 10-year average of 1.54 and is expected to remain range bound, CareEdge said.

It attributed the resilience of corporate India to sustained growth in domestic demand, deleveraging of balance sheets, the China+1 strategy of multinationals, and the government's focus on infrastructure spending.

But export-oriented firms are under pressure. "Small-sized companies are facing the heat, especially the ones that are more export focused, because they are not always able to pass on the higher cost of their inputs," said Sachin Gupta, chief rating officer of CareEdge Rating. Credit ratio for BFSI strengthened to 4.2 in the first half of this fiscal from 1.91 in the previous six months because of improving asset quality and sharp deduction in NPAs.