India Inc credit outlook turns positive, upgrades rise: Crisil


Ratings agency Crisil revised the credit quality outlook of India Inc to “positive” from “cautiously optimistic” in FY22 on sustained recovery in demand after the blip caused by the second wave of Covid-19 afflictions in the first quarter.

The increase in coverage of vaccinations should mitigate the impact of a third wave if it comes about, the agency said.

“The credit ratio (upgrades to downgrades) in the first four months of this fiscal improved to more than 2.5 times,” the agency said.

“It had touched a decadal low of 0.54 time amid the first wave in the first half of fiscal 2021, before recovering to 1.33 times in the second half, buoyed by a rebound in demand.”

A Crisil study of 43 sectors showed the current recovery is broad-based.

“As many as 28 sectors are on course to see a 100 per cent rebound in demand to pre-pandemic levels by the end of this fiscal, while 6 will see upwards of 85 per cent.”

According to Chief Ratings Officer, Subodh Rai, the outlook revision factors in strong economic growth, both domestic and global, and containment measures that are localised and less stringent compared with the first wave, which should keep domestic demand buoyant even if a third wave materialises.

“We believe India Inc is on higher and stronger footing,” Rai said.