Corporate India’s credit ratings held steady in H1FY24, thanks to strong domestic demand, healthier balance sheets, the China+1 strategy, and government infrastructure investments, according to CARE Ratings. The agency upgraded 217 entities and downgraded 130 during this period, resulting in a credit ratio of 1.67, in line with expectations but down from H2FY23 and H1FY23. CARE Ratings cautioned about rising credit risk factors such as food inflation, weather instability, fluctuating oil prices, and geopolitical tensions.
GDP growth in Q1FY24 reached 7.8%, driven by the base effect, robust services, manufacturing, and construction sectors. However, future growth is expected to moderate due to base normalization.
The credit ratio for Investment Grade companies decreased from H2FY23 to H1FY24 but remained resilient. Export-focused sectors faced challenges, with upgrades surpassing downgrades, especially in auto, iron and steel, real estate, hospitality, healthcare, and logistics.
Downgrades were mainly observed in small and mid-sized firms with weaker credit profiles, particularly in chemicals, textiles, pharmaceutical ingredients, and agro-based industries.
In the infrastructure sector, the credit ratio held strong in H1FY24, led by transport infrastructure and the power sector. The construction sector exhibited mixed performance, driven by project commissioning and refinancing in roads and solar power generation.
The transport sector’s outlook remains positive, driven by a robust pipeline of projects and renewable energy expansion to meet rising power demand.