India Inc’s performance to improve in H2 of 2021-22: CRISIL

New Delhi: India Inc’s performance in terms of credit ratings improved sharply in the second half of FY 2021-22 on the back of continued improvement in demand, secular divergence by debt issuers and proactive relief measures by the government, Crisil Ratings said.

CRISIL Rating Credit Ratio 1 (upgrade to downgrade) increased to 5.04 times in the second half (H2) of FY 2022 as compared to 2.96 times in the first half (H1), underscoring the continued improvement in the performance of India Inc. .

Overall, there were 569 upgrades and 113 downgrades in the second half (H2) of 2021-22. The upgrade rate increased from 12.5 percent in H1 to 15.4 percent in H2, while the downgrade rate decreased from 4.2 percent to 3.1 percent over the same period. Crisil Ratings said the downgrade rate is less than half the average of 6.5 per cent seen in the last ten-and-a-half years.

The performance comes on the back of a sustained recovery in demand (which pushed most sectors’ revenues to their pre-pandemic levels), secular divergence by debt issuers (seen in the last few fiscal years and through the pandemic), and proactive relief measures. Is. by the government (which dealt a blow to the pandemic), it said.

The outlook of CRISIL Ratings on credit quality remains ‘positive’, with the number of upgrades expected to decline in FY2023 as well.

However, going forward, the credit ratio may decrease for two reasons: one, demand and profitability may soften if commodity prices remain high; And two, the withdrawal of COVID-19 relief measures. Also, with office reopening and business travel resuming, some of the cost savings for 2020-22 will be wiped out. Read also: Apple iPhone 13 on sale at online store with a discount of Rs 28,000; check offer price

Improvement in demand, agility in managing supply chains, and tightness on costs have driven upgraded companies’ average operating profit up 41 percent over the past two fiscal years – more than double the portfolio rate. Read also: Google working on Android 13 to allow two carrier connections on one eSIM

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