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Indian corporate balance sheets healthiest in at least 10 years, show rating agencies: ICRA, CRISIL…
The number of companies that saw rating upgrades were 5.5x the number downgraded in the first half ended Sept 30, as per Crisil. ICRA says the number was 3x for them. Crisil’s S Vemuri and ICRA’s J Makkar talk about the reasons, the buoyant sectors, and the clouds ahead.
Going by the latest figures from rating agencies, Indian corporate balance sheets are about the healthiest in at least 10 years. Rating agency CRISIL’s upgrades were 5.5 times more than the number of downgrades. In the case of ICRA, the upgrades were three times the downgrades.
CRISIL has upgraded ratings for 569 corporate houses while downgraded that for 103 in the first half of FY23. The upgrade rate has climbed to 16.7 percent, while the downgrade rate remained largely unchanged at 3 percent.
ICRA has upgraded ratings for 250 corporate houses, while downgraded the rating for 76 corporates in the first half of FY23. The upgrade rate for H1 FY23 is at 18 percent, against a 10-year average of 11 percent.
As per CRISIL’s study, among the buoyant or the strengthening sectors were pharma, speciality chemicals, and hospitals. These sectors are likely to see a growth of 10 percent in cash flows.
“Given the headwinds, there are certain sectors, especially the export-driven ones, where we would see a moderation in terms of performance; textiles, pharma, IT, for example, could see some cash flows getting moderated,” Somasekhar Vemuri, Senior Director & Head of Ratings Criteria-Regulatory Affairs and Operations, CRISIL Ratings.
“We have had a sizable number of companies in our portfolio, and this ratio seems to be the highest, but if I were to look at 2004-05 or 2005-06, maybe even higher, but I would like to highlight that then the number of companies in our coverage was much smaller, maybe about 300 odd companies compared to 6,800 companies that we cover now or even for the last decade where we used to cover a fairly sizable number of companies,” He said infrastructure was doing the best as of the total upgrades, 35 percent of corporations function in the sector. This includes large realty companies.
“We see that this is largely a domestic story decoupled from what is happening on the global macros and the headwinds which are there,”
ICRA has also upgraded the ratings of several branded apparel manufacturers and retailers. These businesses rose on the back of the tailwinds of formalisation, including the shift in customer preferences towards branded wear. Some entities engaged in leather garment and woven apparel exports were upgraded as they experienced a strong overseas demand post-pandemic.
Several small to mid-sized NBFCs with a loan book ranging between Rs 500 crore and Rs 10,000 crore, which showed a track record of consistent business growth while maintaining or improving asset quality and capitalisation, were upgraded. Ratings of three banks were also upgraded.

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