New Delhi, April 1 India Ratings and Research (Ind-Ra) said on Wednesday that the corporate credit profile has remained strong for the fifth consecutive year in 2025-26, supported by domestic policy measures and favorable macroeconomic conditions.
Disruptions related to tariffs were largely manageable and affected only a few entities in export-heavy sectors, it added, noting that the ongoing conflict in West Asia will test the strong balance sheets of the corporate sector in the current fiscal, which begins on April 1.
During FY26, Ind-Ra upgraded the ratings of 361 issuers and downgraded the ratings of 115 issuers.
The upgrade-to-downgrade ratio dipped slightly to 3.1 in FY26 from 3.5 a year ago.
Arvind Rao, Head of the Credit Policy Group at Ind-Ra, said that the FY26 performance of corporate India reflects a narrative of resilience stemming from policy reforms and post-pandemic recovery.
Strengthened balance sheets, built from successive years of deleveraging, soft global commodity prices, strong domestic consumption, and sustained government infrastructure spending have collectively supported credit health.
Furthermore, structural catalysts ranging from income-tax cuts, GST rationalization, the RBI's 125 basis points rate cuts, and an above-normal monsoon have led to better-than-expected demand, propelling FY'26 GDP estimates to 7.6 per cent.
"These measures collectively created crucial buffers to withstand headwinds, notably the high US tariffs applicable for a reasonable part of the year. The impact from US tariffs had minimal disruptions to the credit profiles of Ind-Ra's rated portfolio," Rao said.
Ind-Ra said that the West Asia crisis adds a new category of external shock for Indian corporates – one that targets India's energy supply, with limited supply diversification options – rather than just its prices.
The FY26 credit profiles do not reflect even incipient stress from the evolving conflict, as the escalation materialized only in the closing month of the financial year, it added.
However, as the conflict continues to escalate, the five years of balance sheet strengthening – that corporate India has undertaken since FY21 – will be tested in FY27.
"While the timing and magnitude of these pressures remain uncertain, this buffer appears to be adequate for higher-rated entities (A category and above), while BBB and lower-rated corporates – not just limited to energy-intensive sectors – may find FY27 a challenging year," Ind-Ra added.