India Inc is a global turmoil with a strong credit quality in H1

Copyright © HT Digital Streams Limit all rights reserved. Infra, the construction sectors see most upgrades in H1 FY26, the export sector feels that the heat of the US rates CRISil said most of the credit rates seen in infrastructure and related sectors, such as construction and engineering, roads, renewable energy, capital goods and secondary steel. (HT_PRINT) Summary credit profiles were aided by domestic factors, including low-decade low inflation, a 100 basis points reduction in interest rate, upper normal molons and consumption-support policies such as lower income taxes and reduced GST, according to Crisil, ICRA, India rating and Caredge. Despite geopolitical conflicts, bags of slowdown in domestic demand, rising retail credit delays and the high rates imposed by the US on Indian exports, the credit quality of Indian businesses was still resilient in the first half of the current financial year, which was helped by domestic growth and growing balance states. “The strong economic spade of the corporate India, which has been developed since the pandemic, still protects credit profiles from relentless geo-political and economic uncertainties,” says Arvind Rao, senior director, head of credit policy group at India ratings, adding that all these headwinds had to be a small degree of a few drugs, “but there is a minimal industries. Credit profiles have been reinforced by favorable domestic macroeconomic factors, including low-decade low inflation, a 100 basis points reduction in interest rate, upper normal monsoon and consumption-support policy measures such as lower income taxes and reduced goods and service taxes (GST), the credit rating agencies read. Crisil said that the 14% upgrade rate exceeded the average of 11% over the past decade, with most credit rates seen in infrastructure and related sectors, such as construction and engineering, roads, renewable energy, capital goods and secondary steel. The 6.4% downgrade rate for H1 FY26 was in line with the average of ten years, with downgrades led by export-linked sectors, such as diamond politicization, shrimp exporters and manufacturers of homes that have the bulk of US rates. Upgrades for the other agencies have also been seen in sectors such as commercial property, car and car components, consumer services, consumer services such as educational institutions, hospitality, healthcare and durable consumers. Downgrades were mainly seen in sectors as basic chemicals, small and car and car supplements, trade and distribution companies and ceramic manufacturers. Some FMCG businesses have seen pressure on profitability amid rising operating expenses, increased competition, elongated working capital cycles, and some in financial services due to deterioration in the quality of the BAT in the MFI business and the pressure on profitability amid higher credit costs. Crisil upgraded 499 entities and downgraded 230 during the period. ICRA upgraded the ratings of 214 entities and downgraded 75, while India ratings upgraded the ratings of 181 issuers and downgraded 57 issuers. CareEdge ratings saw 282 upgrades and 110 downgrades. India ratings have said that the integrity of the balance sheet of businesses in the balance sheet was preserved by delaying the long-awaited Capeex cycle amid demand uncertainties, while business expansions rely on internal accruals and fairness. As a result, large businesses and top judging companies have seen the highest upgrades, while slightly vulnerable middle corporate issuers show a greater weakness that is reflected at a higher rate of downgrades. The outlook in the second half of the year, the infrastructure and construction sector is seen that benefits from diversified order books, predictable cash flow, hospitality of rising momentum in relaxation and business trips, and FMCG of continued demand led by improved domestic consumption and increasing premium. On the other hand, the rates set by the US will, the credit quality of some export-linked sectors, such as diamond polish, shrimp exporters, home textile makers, and to some extent weigh chemicals and capital-good manufacturers, given that the country is 20% of India’s merchandise exports. “The imposition of a sharp 50% tariff on Indian exports to the US presents a significant challenge for exporters, especially in sectors such as cut and polished diamonds, textiles and seafood, which is very dependent on the US market,” said K. Ravichandran, executive vice president and chief officer, ICRA. The US is estimated to account for almost 20% of India exports, of which 50-60% is now vulnerable, ICRA said. “More complicated of the day”. “Sharp escalation in US rates is reforming trade flow and supply chains, creating challenges for Indian enterprises and holding the private sector in the private sector, until there is greater clarity on demand,” he said, adding that export-heavy sectors can have the pressure in the nearby term, in addition to the effect of the order-as a weakening. of capital of the declining industry, and the interruption of the thinning of exports. “To be sure, the pre-load of revenue by exporters in the first half would mean that the full impact of the rates may not be this fiscal,” Crisil said, adding that other restrictive measures such as a significant hike in H-1B visa visa may not significantly affect profitability, especially for the it sector, as businesses recognize their resource strategies. Financial services Financial services were a mixed bag in H1 FY26 in which credit quality was largely stable for most banks, but the increase in stress was seen for some NBFCs, small financing banks and microfinance institutions. On the other hand, some upgrades were driven by healthier financial risk profiles of banks and housing finance businesses, together with improvements in selected groups in other financial services. For FY26 as a whole, credit quality prospects for banks and non-banks are expected to remain steady, with the expectation that credit growth will take up in the second half by lower interest rates, reducing policy rates and improved consumption driven by rationalizing the GST rates and income tax cuts. Banks and non-banks asset equality and non-banks are expected to be steady, even if the bags of vulnerability, such as MSME, unsecured and microfinance and export-oriented segments. The agencies’ PEG bank credit growth for FY26 10.4–11.3%, while NBFC’s loan books grow by 15-17%. Catch all the industry news, bank news and updates on live currency. Download the Mint News app to get daily market updates. More topics #korporative debt read next story