Pace of rating cuts up since March: Icra

Mumbai: Corporate India's credit quality has deteriorated since March, with the Covid-induced pandemic taking its toll on the cash flows of local companies, particularly those that depend on discretionary consumer expenditure for their revenue.

Credit rating agency Icra took 315 negative rating actions between March 1 and May 15, out of which 150 were downgraded, while 122 outlooks were changed to negative — a majority of them linked to the pandemic. Upgrades were only 24 in that period.

“The pace of rating downgrades has accelerated, with the average monthly downgrades increasing by 22% during this period, compared to the monthly average of FY20,” Icra said. “Given the current uncertainties ... 43 entities were also placed on ratings watch. However, negative rating actions have so far impacted only 9.6% of the rated portfolio of corporate sector entities.”


Icra has a negative outlook on aviation, retail, hotels and restaurants, textiles, automotives, metals, oil and gas and real estate sectors. It has a stable outlook for cement, construction and downstream oil companies.

“Out of the top 10 sectors that witnessed a negative rating action since March, a large proportion were those categorised as “High Risk”. by Icra. These included aviation, hotels and restaurants, retail, and ports.

The rating agency has categorised FMCG, sugar, seeds and utilities as low-risk sectors.