ICRA Reports Robust Credit Upgrades in FY2025
In fiscal 2024-25, India's corporate sector witnessed another year of strengthening credit profiles, with rating agency ICRA upgrading the ratings of 301 companies compared to 150 downgrades. This marks the fourth consecutive year of improved corporate credit profiles, highlighting resilience amid evolving economic conditions.
The credit ratio, representing upgrades versus downgrades, remained healthy at 2.0, although it moderated slightly from its peak of 3.0 recorded in FY2022.
Strengthening Balance Sheets Drive Improvements
Commenting on the ongoing positive trend, K Ravichandran, Executive Vice President & Chief Rating Officer at ICRA, stated, “India Inc has experienced an extended period of credit profile improvement, largely attributable to strengthening balance sheets.”
Ravichandran further highlighted that over the last decade, the combined operating profits of approximately 6,000 listed and unlisted entities reviewed by ICRA grew at a Compound Annual Growth Rate (CAGR) of 12%, significantly outpacing the total debt growth rate, which stood at just 4%.
Ind-Ra Observes Lowest Downgrade-to-Upgrade Ratio in Four Years
Similarly, India Ratings and Research (Ind-Ra) reaffirmed the trend of improving credit quality among corporates. Ind-Ra upgraded ratings for 330 issuers—representing 19% of their reviewed portfolio—in FY2025. Downgrades were limited to 94 issuers, approximately 5%, while affirmations stood at a robust 76%.
The downgrade-to-upgrade (D/U) ratio recorded by Ind-Ra improved notably to 0.28 in FY2025, compared to 0.37 in FY2024, maintaining a historic low for the fourth consecutive year.
Arvind Rao, Senior Director at Ind-Ra, attributed the sustained improvement in corporate credit profiles to robust balance sheets, underscoring the sector's resilience.
Crisil Ratings Predict Continued Positive Momentum
Crisil Ratings also reported a strong credit performance in the second half (October-March) of FY2025, issuing 423 upgrades against 160 downgrades. The credit ratio for the period stood at 2.64, slightly lower than the 2.75 reported in the first half.
Subodh Rai, Managing Director at Crisil Ratings, stated, "Our credit quality outlook for India Inc remains positive, with upgrades expected to outnumber downgrades in fiscal 2026. The reaffirmation rate is also expected to remain stable at current levels."
Key Growth Drivers for Corporate India
According to Crisil, corporate India's median revenue growth is projected to rise to 8% in FY2026 from 6.5% in FY2025. The agency anticipates a consumption boost from budgetary tax cuts, easing inflationary pressures, and expected reductions in interest rates.
Additionally, Crisil emphasized that ongoing investments in infrastructure development will have a significant multiplier effect, benefiting related sectors. Three major sectors—capital goods, construction (especially roads and bridges), and retail—are particularly poised to benefit from heightened domestic demand.
However, the rating agency cautioned that sectors linked to global markets, such as specialty chemicals, diamond polishing, and agrochemicals, require close monitoring due to potential challenges from moderating global economic growth and external uncertainties.