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Upgrades exceeds downgrades, but credit woes remain: CRISIL

According to CRISIL, improvement in credit quality will be gradual and any significant recovery will be contingent to a sustainable increase in investment demand

The News International Team

Rating agency CRISIL says corporate India’s credit quality is showing early signs of recovery, with number of rating upgrades outscoring downgrades 741:451 during the first half of this fiscal.

But it is too early to celebrate, the rating agency says.

“Despite the credit ratio exceeding 1 time, the ratio of the quantum of debt of the firms upgraded, to that of those downgraded (excluding financial sector players) remained weak at 0.59 times during the same period, reflecting continued pressure on systemic credit quality,” says the CRISIL report.

According to CRISIL, improvement in credit quality will be gradual and any significant recovery will be contingent to a sustainable increase in investment demand.

And for that to happen, the government will have to push through big ticket policy reforms, says Pawan Agrawal, Senior Director, CRISIL Ratings.

“Credit quality buoyancy in the overall economy is still some time away,” says Agrawal in the CRISIL report.

Firms with low debt exposure mostly from export-linked sectors and non-discretionary consumer segments such as traders, packaged foods, pharmaceuticals, textiles and agricultural products, have seen the highest upgrade rates, the CRISIL report says.

Players operating in the construction, engineering and capital goods, and automobile (auto) ancillary sectors had higher downgrade rates than their counterparts in other sectors.

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