India Inc.’s Credit Ratio Climbs to 2.56x in H1FY26: Report

India Inc.'s credit ratio rose to 2.56 times in the first half of the ongoing fiscal year (H1FY26) from 2.35 times registered in the second half of the last financial year, testifying to strong, well-spread resilience across industries.

"Upgrades in H1FY26 increased to 15 per cent from 14 per cent of H2FY25, while downgrades held firm at 6 per cent," said CareEdge Ratings in its recent report.

The agency upgraded 282 companies, while 110 firms were downgraded. Reaffirmations were stable at 80 per cent over the last three years, indicating that the majority of ratings remained intact despite changes in the external environment.

Robust domestic demand and the government's push for infrastructure helped drive the upgrade momentum, with close to 40 per cent of all upgrades associated with the infrastructure sector.

Yet some segments were under pressure. Small auto ancillaries and dealers, chemists manufacturing, Small Finance Banks (SFBs), and NBFCs with exposure to microfinance and unsecured business loans saw the maximum number of downgrades owing to pricing pressure and asset-quality issues.

"While India Inc.'s H1FY26 performance has been better, the external world is becoming increasingly complicated by the day. The steep rise in US tariffs is reconfiguring trade flows and supply chains, making life difficult for Indian corporates and holding back private sector capex till there is more certainty on demand," said Sachin Gupta, Executive Director and Chief Rating Officer, CareEdge Ratings.

Export-driven industries may experience margin squeezes in the short term, although durable balance sheets and consistent domestic consumption still offer a buffer. The report added that India's merchandise exports to the US represent merely 2 per cent of India's GDP, and critical categories such as smartphones and generic drugs are still not under the tariff umbrella at present, providing some protection against short-term large-scale disruption.

Against this complicated environment, India's infrastructure sector continues to remain in the spotlight, underpinned by policy efforts and consistent investment drive. The sector's credit ratio jumped to 8.54 times in H1FY26, with Transport Infrastructure and Power driving the upgrades.