Upgrades continue to outpace downgrades: Indian firms see improved credit ratios amid resilient growth

Most ratings firms continued to see an improvement in the credit ratio- the proportion of upgrades to downgrades indicating an improvement in Indian firms credit quality- an indicator of their debt servicing capacity. But they warn of some concerns like rise in unsecured lending, rise in household debt, stress in export oriented sectors.

Also, several global risk factors are at play – China faces demand-supply mismatches because of which credit risk transmission is a possibility for the commodity producers in India through the price channel. Geopolitical developments also add to the uncertainty.

For Crisil, overall, there were 506 upgrades and 184 downgrades. Credit ratio, or the proportion of rating upgrades to downgrades, increased to 2.75 times in the first half of this fiscal from 1.79 times in the second half of last fiscal. This highlights the sustained strengthening of India Inc’s credit quality.


“Rating upgrades continued to surpass downgrades, reflecting resilient domestic growth, supported by the government’s continued policy support towards infrastructure build, revival of rural consumption demand and leaner corporate balance sheets” said Subodh Rai, Managing Director, Crisil Ratings.

For Icra the Credit Ratio of ICRA-assigned ratings, defined as the ratio of the number of upgrades to that of downgrades, stood at 2.2x in H1 FY2025 (2.1x in FY2024), an outcome of the largely benign operating environment, demand buoyancy in select sectors, improvement in risk profiles as assets transitioned from project-stage to operational-stage, and a broader trend in deleveraging.

“The credit quality of India Inc. remains steady, and in the past six months, there hasn’t been an imperative to change the outlook on

any sector” said K Ravichandran, chief rating officer, Icra. “There are some emerging pockets of concern, however, like an expansion in household debt, growth in unsecured lending, with early signs of rising delinquencies in unsecured retail and microfinance segments”.

For CareEdge Ratings there were 215 upgrades and 133 downgrades across sectors in the first half, with export-oriented sectors like Textiles and Chemicals experiencing higher downgrades. Credit Ratio moderated to 1.62 times in H1FY25 down from 1.92 times in H2FY24. ” The moderation in the credit ratio can be mainly attributed to the muted performance of the mid & small corporates, especially in export-oriented sectors”, the ratings firm said.

India Ratings and Research (Ind-Ra) upgraded the ratings of 202 issuers, representing 20% of the reviewed portfolio, while the ratings of 62 issuers were downgraded. The downgrade-to-upgrade (D/U) ratio was low at 0.31 for 1HFY25 (1HFY24: 0.38, FY24: 0.37).