India Inc’s credit quality positive for H1

There is a likelihood of interest rate cuts globally in 2024. We expect the RBI to cut interest rates in the second half of the current fiscal - Krishnan Sitaraman, Chief Ratings Officer, Crisil Ratings

New Delhi: Crisil Ratings on Monday said the credit quality outlook for Indian corporates remains positive for the April-September period of the 2024-25 fiscal year with upgrades continuing to outpace downgrades.

In the last fiscal year, Crisil gave 409 rating upgrades and 228 downgrades. Some export-linked sectors, such as textile and seafood, saw a higher downgrade rate due to subdued global demand or high-cost inventory that impacted profitability.

“India Inc’s credit quality outlook is positive for the first half of fiscal 2025 with upgrades expected to outnumber downgrades. Multiplier effect of government capex will continue to drive infrastructure and linked sectors. Healthy balance sheets will continue to support the credit quality outlook, with capex funding seen prudent,” Crisil Rating said.

It said the outstanding bank credit is expected to cross Rs200 lakh crore by March 2025, from Rs172 lakh crore a year ago, even though there would be moderation in the rate of credit growth. The Indian economy with a GDP growth of 6.8 per cent is expected to remain the fastest-growing large economy in the current fiscal. The growth will, however, moderate from 7.6 per cent expected in 2023-24 as high interest rates and lower fiscal impulse to growth will temper demand, according to Crisil. Crisil Ratings Managing Director Gurpreet Chhatwal said the three key pillars of India Inc’s credit quality -- deleveraged balance sheets, sustained domestic demand and government-led capex -- kept the upgrade rate elevated in the second half of FY24.