India Inc. credit ratio rose to 2.56 times in H1FY26: Report

NEW DELHI — India Inc. credit ratio rose to 2.56 times in the first half of this fiscal (H1FY26), up from 2.35 times in the second half of the previous financial year. 

The increase underscores strong, broad-based resilience across sectors.

"In H1FY26, upgrades improved to 15 per cent from 14 per cent seen in H2FY25, while downgrades remained steady at 6 per cent," Care Edge Ratings said in its report.

The rating agency upgraded ratings for 282 firms, while 110 were downgraded.

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Reaffirmations remained largely stable at 80 per cent over the past three years, indicating that most ratings continued to hold strong despite a changing external environment, the report stated.

Steady domestic demand and the government’s infrastructure push sustained upgrade momentum, with nearly 40 per cent of all upgrades linked to infrastructure.

While small-sized auto ancillaries and dealers, chemical manufacturers, small Finance Banks (SFBs) and NBFCs exposed to microfinance and unsecured business loans saw the highest downgrades amid pricing pressures and asset-quality concerns.

“While India Inc.’s performance has improved in H1FY26, the external environment is turning more complex by the day. The sharp escalation in US tariffs is reshaping trade flows and supply chains, creating challenges for Indian companies and keeping private sector capex in abeyance until there is greater clarity on demand," said Sachin Gupta, Executive Director and Chief Rating Officer, CareEdge Ratings.

Export-heavy sectors may face margin pressures in the near term, even as resilient balance sheets and steady domestic demand continue to cushion the impact.

The fact that merchandise exports to the US account for just 2 per cent of India’s GDP, with smartphones and generic pharmaceuticals currently outside the tariff ambit, provides some buffer against immediate large-scale disruption, the report said.

According to the report, against this complex backdrop, India’s infrastructure story continues to shine, supported by policy thrust and steady investment momentum. The credit ratio of the infrastructure sector jumped to 8.54 times in H1FY26, with Transport Infrastructure and Power leading the upgrades.