Crisil Ratings on Monday stated the credit score high quality outlook for Indian corporates stays optimistic for the April-September interval of the 2024-25 fiscal yr with upgrades persevering with to outpace downgrades.

In the final fiscal yr, Crisil gave 409 score upgrades and 228 downgrades. Some export-linked sectors, resembling textile and seafood, noticed a better downgrade price resulting from subdued international demand or high-cost stock that impacted profitability.

“India Inc’s credit score high quality outlook is optimistic for the primary half of fiscal 2025 with upgrades anticipated to outnumber downgrades. Multiplier impact of presidency capex will proceed to drive infrastructure and linked sectors. Healthy steadiness sheets will proceed to help the credit score high quality outlook, with capex funding seen prudent,” Crisil Rating said.

It said the outstanding bank credit is expected to cross Rs 200 lakh crore by March 2025, from Rs 172 lakh crore a year ago, even though there would be moderation in the rate of credit growth.

The Indian economy with a GDP growth of 6.8 per cent is expected to remain the fastest-growing large economy in the current fiscal. The growth will, however, moderate from 7.6 per cent expected in 2023-24 as high interest rates and lower fiscal impulse to growth will temper demand, according to Crisil.

Crisil Ratings Managing Director Gurpreet Chhatwal said the three key pillars of India Inc’s credit quality — deleveraged balance sheets, sustained domestic demand and government-led capex — kept the upgrade rate elevated in the second half of FY24.

“With balance sheets in most sectors at their healthiest, capacity utilisation around peak levels and expected interest rate cuts, a broad-based pick-up in private capex is finally in sight,” Chhatwal stated, including that sectors with export linkages might have some uncertainties round them.

Stating that financial institution credit score excellent might cross Rs 200 lakh crore by March 2025, credit score progress will stay wholesome, albeit a tad decrease at 14 per cent this fiscal yr. Credit progress was 16 per cent within the final fiscal yr that ended on March 31.

Overall gross non-performing belongings (NPAs) will proceed to development down and contact recent decadal lows, it stated.

Crisil Ratings Senior Director and Chief Ratings Officer Krishnan Sitaraman stated there’s a probability of rate of interest cuts globally in 2024.

“We count on the RBI to chop rates of interest within the second half of the present fiscal,” Sitaraman stated, including that credit score high quality is more likely to stay optimistic.

The RBI is scheduled to announce its first monetary policy review for the current fiscal on April 5.

For FY25, as many as 21 of 26 corporate sectors have strong to favourable credit quality outlook, marked by robust balance sheets and healthy operating cash flows — expected to be as much, or higher, than in fiscal 2024.

These include auto-component manufacturers, companies in the hospitality and education sectors where the credit quality is supported by healthy domestic demand.

It also includes sectors benefiting from the government’s infrastructure spending, such as construction companies, and steel, cement and capital goods manufacturers.

Four corporate sectors — specialty chemicals, agrochemicals, textile cotton spinning and diamond polishers — are facing headwinds given their fortunes are aligned with global macroeconomic conditions, which are subdued at present.