India Inc credit quality strengthens in H1FY27 despite global uncertainty

Reports coming in for today mention that India Inc's credit quality strengthened in H1FY27 despite geopolitical tensions, volatile energy prices, inflationary pressures and tighter global monetary conditions, according to CareEdge Ratings.

CareEdge's credit ratio, or the proportion of rating upgrades to downgrades, nearly doubled to 3.95 times in H1FY27 from 1.93 times in H2FY26. The rating agency recorded 300 upgrades against 76 downgrades. The upgrade rate rose to 16% from 13%, above the 10-year average of 15%, while the downgrade rate declined to 4% from 7%, an all-time low.

Corporate balance sheets additionally strengthened between 2016 and 2026. Overall gearing nearly halved to 0.50 times from 1.04 times, PBILDT margins expanded to 14% from 10%, while interest coverage rose to 7.59 times from 4.10 times.

Sachin Gupta, Executive Director and Chief Rating Officer, CareEdge Ratings, stated, "The improvement in credit quality comes at a time when the external environment has become considerably more challenging. Geopolitical tensions have kept global energy prices high, contributing to inflationary pressures across major economies. Global monetary conditions have additionally tightened, with the US The US central bank raising its benchmark rate in September and several other major central banks resuming policy tightening."

The manufacturing and services sector's credit ratio improved to 2.84 times from 2.06 times, while infrastructure recorded the sharpest improvement, rising to 8.31 times from 1.67 times. Even after adjusting for a large portfolio-level rating action, infrastructure's ratio remained around 5 times.

Rajashree Murkute, Senior Director, CareEdge Ratings (Infrastructure Ratings), stated, "Project commissioning continued to backing upgrades, particularly across Hybrid Annuity Model (HAM) road projects and renewable power."

BFSI's credit ratio rose to 5.40 times from 2.25 times. Vineet Jain, Senior Director, CareEdge Ratings (BFSI Ratings), stated, "Asset quality and funding have remained stable across banks, NBFCs and HFCs."

CareEdge stated H2FY27 could test this resilience as geopolitical tensions, energy prices, inflation, global interest rates and trade policy keep evolve.