India Credit Ratings: Upgrades Outpace Downgrades in FY25

New Delhi, Apr 1 (PTI) Rating agency ICRA on Tuesday said it has upgraded ratings of 301 companies in the just concluded fiscal 2024-25, compared to 150 downgrades, marking the fourth consecutive year of improving credit profiles.

The upgrade to downgrade ratio or the credit ratio remained healthy although it moderated to 2.0 in FY2025 from the peak of 3.0 in FY2022.

ICRA Executive Vice President & Chief Rating Officer K Ravichandran said, “India Inc has experienced an extended period of credit profile improvement, much of it due to strengthening balance sheets."

"Over the past decade, the aggregate operating profits of around 6,000 listed and unlisted entities analysed by us have grown at a CAGR (compound annual growth rate) of 12 per cent, while their total debt has increased by only 4 per cent," he said.

Similarly, India Ratings and Research (Ind-Ra) said the corporate credit profile has strengthened in FY25. The downgrade-to-upgrade (D/U) ratio has remained at historic lows for the fourth consecutive year, with the FY25 ratio improving to 0.28 from 0.37 in FY24.

In FY25, Ind-Ra upgraded the ratings of 330 issuers, representing 19 per cent of the reviewed portfolio.

Rating downgrades were seen in 94 issuers, which is at about 5 per cent. Ind-Ra affirmed 76 per cent of the reviewed portfolio.

Ind-Ra Senior Director Arvind Rao said that the corporate credit profile is continuing to benefit from the robust balance sheets.

Another rating agency Crisil said in the second half (October-March) of the fiscal, there were 423 upgrades and 160 downgrades.

The Crisil Ratings credit ratio stood at 2.64 times in the second half of fiscal 2025, a tad lower than 2.75 times in the first half.

"Our credit quality outlook for India Inc remains positive with upgrades expected to outnumber downgrades in fiscal 2026 even as we expect the reaffirmation rate to remain range-bound at current levels," Crisil said.

"Corporate India would benefit from the urban consumption spur driven by budgetary tax cuts, easing inflation and expected reduction in interest rates. Further, steadfast spending on infrastructure will have a positive multiplier effect and support linked sectors," Crisil Ratings Managing Director Subodh Rai said.

Crisil said the median revenue growth for rated corporates is likely to improve to 8 per cent in this fiscal from 6.5 per cent in the past year, supported by consumption-driven sectors.

Three large corporate sectors -- capital goods, construction (roads and bridges), and retail -- are likely to benefit the most from the drivers of domestic demand.

The performance of sectors linked to global markets -- specialty chemicals, diamond polishers and agrochemicals -- remains monitorable. These are exposed to exogenous uncertainties and face headwinds from moderating global growth, Crisil said.