Indian companies showed stronger financial health in the first half of fiscal year 2026, with their credit ratio climbing to 2.56 times. That’s up from 2.35 times in the second half of the previous year, according to a new report from CareEdge Ratings.
This boost highlights solid resilience across various sectors in India Inc., as experts call the business landscape. Upgrades in credit ratings jumped to 15% during this period, compared to 14% earlier, while downgrades held steady at 6%. In total, the agency upgraded 282 firms and downgraded 110.
Most ratings—around 80%—stayed the same over the past three years, proving that Indian businesses are holding firm even as the global scene shifts.
What drove these positive changes? Steady demand at home and the government’s big push on infrastructure played key roles. About 40% of the upgrades tied directly to infrastructure projects, keeping the momentum going.
On the flip side, some areas faced headwinds. Small auto parts suppliers and dealers, chemical makers, small finance banks, and non-banking financial companies focused on microfinance or unsecured loans saw the most downgrades. Reasons include rising pricing pressures and worries over asset quality.
“India Inc.’s performance has gotten better in the first half of FY26, but the outside world is getting more complicated every day,” said Sachin Gupta, executive director and chief rating officer at CareEdge Ratings. He pointed to sharp U.S. tariff hikes reshaping global trade and supply chains, which could challenge Indian companies and delay private investments until demand clears up.
Export-focused sectors might squeeze margins short-term, but strong balance sheets and reliable domestic demand offer some protection. Plus, India’s merchandise exports to the U.S. make up just 2% of its GDP, and key items like smartphones and generic drugs aren’t hit by tariffs yet, giving a buffer against big disruptions.
Amid these challenges, India’s infrastructure sector stands out as a bright spot. Its credit ratio soared to 8.54 times in H1FY26, led by gains in transport infrastructure and power. Backed by smart policies and ongoing investments, this area keeps shining in India’s economic outlook.
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