Indian corporates are having their best year in a decade in terms of their financial strength opening up the possibility of a revival in capital expenditure. Given the record low interest rates and an improved credit rating, the cost of funds coupled with higher product prices could make new projects viable.
Rating agencies unanimously believe that the incremental pressures on the credit quality of India Inc seem to have largely subsided.
“The speed of recovery has been remarkable, with performance picking up a meaningful pace in the last three to four quarters,” said Arvind Rao, Director, India Ratings. “For manufacturing and service corporates, the improvement in credit profile is from unprecedented deleveraging.”
Analysis of corporate borrowers by rating agencies showed that downgrades far exceeded upgrades in the first half of the current fiscal year, which is in stark contrast to the trend witnessed in the past two years.