Corporate Credit Profile Strong For Fifth Year In A Row In Fy26: Ind-Ra

India Ratings and Research (Ind-Ra) on Wednesday said corporate credit profile has remained strong for the fifth straight year in 2025-26, supported by domestic policy measures and favourable macro-economic conditions.

Tariff-related disruptions were largely manageable and affected only a few entities in export-heavy sectors, it said, adding that the ongoing West Asia conflict will test the strong balance sheet of the corporate sector in the current fiscal beginning April 1.

During FY26, Ind-Ra upgraded the rating of 361 issuers, and downgraded the rating of 115 issuers.

The upgrade-to-downgrade ratio dipped marginally to 3.1 in FY26 from 3.5 a year ago.

Ind-Ra, Head of Credit Policy Group, Arvind Rao, said corporate India’s FY26 performance reflects a narrative of resilience stemming from policy reforms and post-pandemic recovery.

Strengthened balance sheets built from successive years of deleveraging, soft global commodity prices, firm domestic consumption, and sustained government infrastructure spending have collectively supported credit health.

Also, structural catalysts ranging from income-tax cuts, GST rationalisation, RBI's 125 basis points rate cuts and an above-normal monsoon have led to a better-than-expected demand, propelling the FY'26 GDP estimates to 7.6%.

"These measures collectively created crucial buffers to withstand headwinds, notably the high US tariffs applicable for a reasonable part of the year. The impact from US tariffs had minimal disruptions to the credit profiles of Ind-Ra’s rated portfolio," Rao said.

Ind-Ra said the West Asia crisis adds a new category of external shock for Indian corporates - one that targets India's energy supply- with limited supply diversification options- rather than just its prices.

FY26 credit profiles do not reflect even incipient stress from the evolving conflict, as the escalation materialised only in the closing month of the financial year, it added.

However, as the conflict continues to escalate, the five years of balance sheet strengthening - that corporate India has undertaken since FY21 - will be tested in FY27.

"While the timing and magnitude of these pressures remain uncertain, this buffer appears to be adequate for higher-rated entities (A category and above), while BBB and lower rated corporates- not just limited to energy-intensive sectors may find FY27 a challenging year," Ind-Ra added.