Credit quality of Indian Firms sustains Strong in H2FY24, says CRISIL

By Team Startupcity  |  Monday, 01 April 2024, 14:51 IST

Credit quality of Indian Firms sustains Strong in H2FY24, says CRISIL
According to the rating agency CRISIL, the credit quality of Indian companies stayed powerful between the period of October 2023 & March 2024 – H2FY24, backed by deleveraged balance sheets, continued domestic demand and government-owned capital expenditure. The upgrade in rating sustained to exceed the downgrades in ratings in H2FY24. 
The ratio of credit, rating upgrades to downgrades that moderated 1.79 times in the second half of the financial year H2FY24 which is 1.91 times higher when compared to April-September 2023 – (H1FY24). 
Aimed at the new financial year begins in April 2024 – FY25, the credit quality outlook remains optimistic with considerable upgrades saw sustained to outpace downgrades, propelled by domestic demand, reduced corporate debt levels and tailwinds from the  constant build-out of infrastructure.
Sharing insights on this, the Managing director of CRISIL Ratings, Gurpreet Chhatwal says, "The three key pillars of India Inc's credit quality — deleveraged balance sheets, sustained domestic demand, and government-led capex — kept the upgrade rate elevated in the second half of the financial year 2024. That's above the 10-year average for the sixth consecutive half-year."
Further he adds, “While commodity prices have softened, the revenue of upgraded companies grew by about 13 per cent in the financial year 2024, largely led by a pick-up in volume. With balance sheets in most sectors at their healthiest, capacity utilization around peak levels, and expected interest rate cuts, a broad-based pick-up in private capex is finally in sight”
In the present financial year FY25, more than 21 of 26 sectors in corporate examined by CRISIL have strong & promising credit plan outlooks. This credit quality is noticed by the rapid balance sheets & healthy functioning cash flows, projected to be equal or more than in the financial year 2024. These corporate sectors with improved asset quality outlook comprises manufacturers of Auto-components, hospitality & education ventures, where the credit quality is promoted by the strong domestic demands. 
CRISIL stated that it also covers the sectors advancing from the infrastructure expenditure of central government such as construction & building companies & cement, steel & other manufactures of capital goods. 

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