Blitz Bureau
NEW DELHI: THE credit profile of India Inc. improved for the fourth consecutive year in FY2025 driven by a healthy growth in profits, according to an ICRA report filed by IANS.
“ICRA’s rating upgrades consistently outnumbered downgrades during this period by at least two to one. In the just-concluded fiscal, ICRA upgraded the ratings of 301 entities and downgraded 150,” the report stated.
“Although the Credit Ratio of ICRA-assigned ratings, defined as the ratio of the number of entities upgraded to that downgraded, moderated to 2.0x in FY2025 from the peak of 3.0x in FY2022, it remained healthy,” added the report.
K Ravichandran, Executive VicePresident at ICRA, said: “India Inc. has experienced an extended period of credit profile improvement, much of it due to strengthening balance sheets.” Over the past decade, he said, “the aggregate operating profits of around 6,000 listed and unlisted entities analysed by us have grown at a Compound Annual Growth Rate (CAGR) of 12 per cent, while their total debt has increased by only 4 per cent.”
From a credit perspective, this enhanced the ability of corporate India to bear the cyclical challenges of recent periods posed by commodity price inflation, rising interest rates, and subdued demand, he pointed out.
Apart from this general trend, a notable trend in the power, road, and realty sectors has been the increase in the proportion of upgrades due to reduced project risk, sometimes alongside debt refinancing at lower borrowing costs.
In FY2025, around 16 per cent of rating upgrades by ICRA were attributed to this factor, compared to the five-year average of 10 per cent, the report stated.
Rating upgrades in the financial sector, concentrated in H1 FY2025, were attributed to increased scale and higher profitability alongside controlled credit costs. There was also continued demand buoyancy in select sectors, such as hospitality, according to the report.
The strengthening of India Inc.’s credit profile is particularly noteworthy given the tumultuous past few years, which have been marked by global supply chain disruptions, commodity price fluctuations, inflation, and volatility in interest rates and currency values, the report observed. As is often the case, the sectoral picture has been mixed: The aviation and hospitality sectors, two sectors that were among the hardest-hit during the Covid-19 period, have posted a steady recovery and have now considerably surpassed pre-pandemic levels in terms of revenues and profits.
