Crisil raises India Inc credit outlook over broad-based recovery

Crisil Ratings on Wednesday said a broadbased recovery has now put India Inc on a stronger footing and accordingly upgraded Corporate India’s credit quality outlook to 'positive' from the earlier 'cautiously optimistic' outlook.

Crisil said the credit ratio, which shows the number of upgrades to downgrades, rose to over 2.5 times in the first four months of the current fiscal, compared to 1.33 times in the second half of FY21.

The rating agency has done a study of 43 sectors, excluding the financial sector, accounting for 75 per cent of the overall Rs 36 lakh crore in outstanding debt, which shows the current recovery is broad-based.

Twenty-eight sectors are set to witness a recovery in demand back to pre-pandemic levels by the end of the fiscal, with the remaining ones moving upwards 85 per cent.

We believe India Inc is on higher and stronger footing, Subodh Rai, chief ratings officer, Crisil Ratings, said.

The revision in outlook is driven by strong economic growth domestically and globally and the estimate that domestic demand will be buoyant even if a third wave materialises, Rai said.

Among sectors with the most rating upgrades, construction and engineering, and renewable energy benefited from the government's thrust on infrastructure spending while steel and other metals gained from higher price realisations and profitability. Pharmaceuticals and speciality chemicals saw continued buoyancy.

But contact-intensive sectors such as hospitality and education services still bear the brunt of the pandemic and have had more downgrades than upgrades.