Indian companies show stronger financial health in the first half of fiscal 2027, with a credit ratio of 2.18x, reports CRISIL. High infrastructure spending and low debt levels act as buffers against global trade issues. While most sectors are stable, niche areas like textiles face margin pressure due to import competition.
Indian companies have shown increased financial strength in the first half of the 2027 fiscal year, according to the latest data from CRISIL Ratings. The credit ratio, which measures the balance between companies receiving credit upgrades and those facing downgrades, reached 2.18 times. This is a significant improvement from the 1.50 times recorded in the second half of the previous fiscal year. In simple terms, this ratio shows that for every company facing a downgrade, more than two companies received upgrades, signaling a generally stable business environment.
Infrastructure spending has been the biggest driver of this positive trend. About 40 percent of the rating upgrades were concentrated in infrastructure-linked industries, such as road construction, renewable energy, and capital goods. The continuous government focus on large-scale projects has created a steady demand floor, helping these sectors maintain growth despite global economic uncertainty and supply chain friction.
Another key reason for this corporate stability is prudent capital management. The median debt-to-equity ratio for rated companies is approximately 0.5 times. This means that, on average, these companies are not overly reliant on borrowings to fund their operations. With lower debt levels, businesses have more financial flexibility to absorb inflationary pressures and rising fuel costs without facing severe stress.
However, the financial environment is not equally favorable for all industries. Companies in the textile and diamond sectors are currently facing challenges. These segments are dealing with stiff competition from lower-priced imports and are struggling with supply chain disruptions. For investors, this highlights the importance of examining sector-specific performance, as broad stability does not mean every company is performing well.
The banking sector, which supports these corporations, also remains stable. CRISIL projects credit growth to remain between 14.5 and 15.5 percent for the full year. Banks are keeping their asset quality in check, with gross non-performing assets, or bad loans, expected to stay below 2 percent through the end of the fiscal year.
Looking ahead, investors may want to monitor how companies manage external factors, such as fluctuating oil prices, with Brent crude projected to trade between $88 and $93 per barrel for the remainder of the year. Additionally, keeping an eye on consumer demand and potential changes in global interest rates will be important, as these factors could influence future profit margins and overall credit health.