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Credit quality of Indian companies remains strong in H1 of FY23: CRISIL

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  • The credit ratio is in line with the positive credit quality outlook CRISIL Ratings were previously articulated.
  • The credit ratings of nearly 80 percent of the CRISIL Ratings portfolio were reconfirmed.
  • Despite the pandemic, the performance of upgraded companies has improved significantly over the past three fiscal periods.


Low debt balances, domestic demand and improved cash flows led to a higher credit ratio during the first half of FY23, according to CRISIL Ratings.

According to CRISIL Ratings, the corporate credit ratio (upgrades vs. downgrades) remains high – 5.52 times in the first half of this fiscal year (H1-FY23) – underlining the continued broad improvement in India Inc’s credit quality. The credit ratio was 5.04 times in the second half of the last fiscal year (H2-FY22).

Three reasons stand out: 1) strengthening domestic demand, with the economy expected to grow by 7.3% this fiscal year; 2) higher realizations leading to better cash flows; and 3) continuation of low-debt balance sheets as capital expenditures remain low, according to CRISIL Ratings.

The credit ratio is in line with the positive credit quality outlook that CRISIL Ratings had previously formulated – that the upgrades during this fiscal period will far outweigh the downgrades.

The credit ratings of nearly 80% of the CRISIL Ratings portfolio were reconfirmed or there was no change during H1-FY23.

As for the rest of the portfolio, the upgrade rate has changed, increasing to 16.70%, while the downgrade rate was flat at 3.02%. In total there were 569 upgrades and 103 downgrades.

According to the rating agency, the performance of upgraded companies has improved significantly over the past three budgets, despite severe pandemic-related disruptions.

ÔÇťAbout 35% of all upgrades came from the infrastructure sector (including major real estate players). The infrastructure sector is in a unique position because it is largely a domestic story and generally disconnected from global headwinds. Here, upgrades were driven by improved operating cash flows, completion of critical project milestones and capital injection.In recent years, an increasing share of central counterparties in infrastructure projects has led to more predictable payment cycles that provide additional comfort to credit quality,” said Gurpreet ChhatwalDirector.

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