Crisil upgrades ratings of 253 cos on improved credit quality

Rating agencys Crisil today said it upgraded the credit ratings of a record 253 Indian companies in the April-September half of the current fiscal, reflecting an improvement in their loan repayment capacity.

"The stronger credit quality of India's companies has been driven by a robust improvement in economic activity and a healthier funding environment. Domestic demand remains upbeat in most sectors and is likely to help the economy maintain a high growth rate," Crisil said in a statement.

The ratings agency said the auto, steel, construction and commodity-linked sectors witnessed the maximum upgrades during the first six months of the current fiscal. In the financial services sector, a number of NBFCs saw ratings upgrades.
    
During the April-September period, Crisil upgraded the outstanding ratings for 253 companies, a record number in any six-month period. It also downgraded 111 ratings during the period, the statement added.
    
"The outlook remains positive for corporate India and in the next six months, upgrades will continue to outnumber downgrades," Crisil Ratings Senior Director Raman Uberoi said.
    
However, the ratings agency has cautioned that higher input costs and rising commodity prices could put pressure on credit ratings, as profit margins would be hit.
    
"Companies are going for capital expenditures, which in turn, results in higher debt. This, coupled with the high cost of financing, would affect the profit margins," Uberoi added.
    
He said that going ahead, if rising demand increased actual profits, margins would shrink.
    
Uberoi said the majority of the downgrades during the period were for companies in the sub-investment category. "Most ratings with negative outlook are in rating categories, 'BB' and lower," Crisil said.
    
Crisil conducted a review of around 5,300 outstanding ratings on September 30, it said.
    
"While we expect economic growth to remain buoyant, disruptions due to factors such as protracted recovery in the global economy, build up of inflationary expectations, or severe profitability constraints, can result in pressure on credit ratings, given the likely increase in debt because of capital expenditure," Crisil Ratings Head Somasekhar Vemuri said.