India’s corporate credit quality remains strong: CRISIL

According to CRISIL RatingThe corporate credit ratio (upgrade versus downgrade) remains high – 5.52 times in the first half of this fiscal (H1-FY23) – underscoring the ongoing broad-based improvement in India Inc’s credit quality. The credit ratio stood at 5.04 times in the second half (H2-FY22) of the previous fiscal.

“The credit ratio is in line with the positive credit quality outlook expressed by CRISIL Ratings earlier – that the upgrade will be much higher than the downgrade during this financial year,” it said.

The rating agency highlighted three factors that are strengthening domestic demand, with the economy expected to grow 7.3% this fiscal, higher realizations on better cash flows, and continuing debt-light balance sheets as capex is lower. lives. The performance of advanced companies has improved significantly over the past three financial years despite severe disruptions related to the pandemic.

Gurpreet Chhatwal, Managing Director, Crisil Ratings says, “About 35% of all upgrades were from the infrastructure sector (including big realty players). The infrastructure sector is in a unique position to be a domestic story at large and global in general. Aside from adversity. Here, improved operating cash flow was driven by improved cash flow, completion of critical project milestones and equity infusion. The increasing share of central counterparties in infrastructure projects over the years led to more predictable pay cycles. The credit quality has been motivated to provide additional convenience.”

While capacity utilization is on an improving trajectory supported by healthy uptake, private capital expenditure is not expected to increase substantially in the near term. Despite some sectors facing challenges like high input cost and rising interest rates, it has arrested the downgrade rate.

Meanwhile, the credit quality outlook of the financial sector is seen to be stable, with bank credit growth growing at 14-15% this fiscal from 12% in the previous fiscal, while for non-banks 4, credit growth is 11- Expected to be 12% versus 6-8%. According to rating agency last financial year. As for asset quality, banks’ gross non-performing assets (GNPAs) are likely to improve by 90 basis points (bps) this fiscal, riding on post-pandemic recovery and higher credit growth. Is.