India Inc's credit quality showed further improvement in April-September period with the ratio of upgrades to downgrades inching higher.
The credit ratio's improvement to 5.52 in H1FY23 as compared to 5.04 in H2FY22 was driven by leaner balance sheets led by healthy cash flows and muted investments, Crisil Ratings, which rates 6,800 companies, said.
However, the agency clarified that the data may not be fully representative as many small businesses with outstanding ratings have turned non-cooperative in sharing data on a continued basis which can be driven by adverse financial health.
"India Inc has emerged stronger post-pandemic," its managing director Gurpreet Chhatwal said, exuding confidence that the corporate India can weather the current storm caused by global events like higher inflation and monetary tightening which will hurt India's exports.
Crisil's senior director Somasekhar Vemuri said there can, however, be a moderation in the credit ratio going ahead due to some of the challenges faced by companies.
During the first half of the fiscal year, the credit ratio moved ahead majorly driven by the infrastructure sector, which contributed a third of the upgrades, the agency said, attributing the same to higher project work being undertaken and improvement in project clearances and payments.
The six months saw 569 upgrades and 103 downgrades, while ratings on 80 per cent of the companies being reaffirmed, it said.
The ongoing interest rate tightening may result in some of the companies going slow on investments, and the higher interest costs will have an adverse impact on the renewables sector the most with the project viability itself coming under pressure, its chief ratings officer Subodh Rai told reporters.