Rating upgrades outpace downgrades in FY26

MUMBAI: India’s corporate credit profile remained resilient in FY26 with rating upgrades outpacing downgrades across agencies, although moderation in momentum and rising global risks have prompted a more cautious outlook for FY27.

India Ratings and Research, CRISIL Ratings, CareEdge Ratings, and ICRA released their assessments for FY26, indicating that while corporate balance sheets remained stable, emerging risks are building as FY27 approaches.

The upgrade to downgrade ratio, a key measure of corporate health, stayed above one across agencies in FY26 indicating that there were more upgrades than downgrades. ICRA and Ind-Ra reported ratios of 3.1, driven by easing project risks in sectors such as power and roads and supported by deleveraged balance sheets and firm domestic consumption. CareEdge’s ratio moderated to 1.93 from 2.56 in the first half of FY26, reflecting more selective improvements. CRISIL’s ratio eased to 1.50 from 2.17 earlier in the year amid tariff-related uncertainties affecting exports.

According to CRISIL, stress tests across 30 sectors showed that 23 remain resilient due to strong balance sheets, while sectors such as ceramics and airlines are more vulnerable to disruptions.

Sectorally, agencies expect infrastructure, renewable power, healthcare, and defence to remain supported by govt capital expenditure and domestic demand.

Export oriented sectors, MSMEs, and energy intensive industries such as fertilisers, chemicals, and textiles may face margin pressure due to higher input costs and supply chain disruption. Banks and NBFCs are expected to retain stable credit profiles, although agencies are monitoring asset quality in microfinance and unsecured retail lending.
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