Credit rating agencies cut ratings of firms they analyse as U.S. tariffs hit export-oriented sectors in the first half of fiscal 2026.
In H126, Crisil upgraded 2.17 times the number of companies it downgraded in H1FY25. India Ratings reduced this number to 3 in the reporting period against 3.5 in H1FY25. CareEdge alone increased the upgrade-downgrade ratio to 2.56 in the first half of the current fiscal from 1.62.
While all the three agencies cited better performance of and expected an increase in government spending in the infrastructure sector, Ind-Ra and Crisil cited tariff-led hit to export-oriented sectors as a reason behind the moderation in upgrade-to-downgrade ratio.
Textiles, shrimps, diamond polishing, home furnishing and agro chemical were identified as sectors that may be hit by tariffs and so were downgraded. Infrastructure sectors, capital goods, secondary sector steel, construction and engineering, and hospitality contributed to half of the upgrades. Intensity of upgrades slowed in large and medium seized corporates but large corporates were better placed at capturing demand. In the financial sector, banks had a stable credit quality but NPAs may inch up in MSME’s that are exposed to exports, Crisil said. Ind-Ra forecast a credit growth rate of 12% and Crisil at 13% in fiscal 2026, as against 11% previous fiscal. RBI’s rate cuts have not been completely transmitted as corporates have tapped into bond markets for financing, Crisil said. NBFCs have shown some stability but microfinance needs continuous monitoring said experts at the rating agencies.
Published – September 30, 2025 08:47 pm IST
