FY25 credit quality outlook positive for Indian companies: Crisil
NEW DELHI : The credit quality outlook for Indian firms is positive for fiscal year 2025 (FY25), rating agency Crisil on Monday. This optimism stems from strong domestic demand, low corporate debt levels, and the ongoing benefits of infrastructure development. In the recently concluded fiscal year, Crisil Ratings recorded 409 upgrades for domestic companies and 228 downgrades.
These upgrades were primarily driven by robust domestic consumption and considerable government expenditure across various sectors. Nonetheless, sectors with significant export dependencies, such as textiles and seafood, saw a higher number of downgrades, impacted by weak global demand or challenges related to high-cost inventory that affected profitability. Crisil Ratings said that the upgrade rate dipped a marginal 70 basis points sequentially to 12.0% in the second half, attributed to strong domestic consumption and government investments.
Infrastructure-related sectors, including construction, renewable energy, and road assets, were among the top performers in terms of upgrades. "The downgrade rate, at 6.7%, remains closer to the 10-year average. As expected, 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.
That said, the reaffirmation rate remained steady at about 81%," it added. Looking ahead to the first half of FY25, Crisil expects positive credit quality outlook to persist, with upgrades likely outnumbering downgrades. The agency emphasized the multiplier effect of government capital expenditure (capex) on infrastructure and related sectors.
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