S&P holds that Indian corporations are credit worthy.

Recently, S&P Global Ratings underlined the favourable credit climate for Indian corporations due to rising GDP and strong corporate finances. That Indian businesses are in “good credit shape” was one of the report’s findings.Read also this: India opposes China’s Belt and Road Initiative at SCO summit. An improvement in credit quality was indicated by the rating agency’s forecast that rated corporate and infrastructure entities in India would see a 50 percent rise in aggregate earnings before interest, taxation, depreciation, and amortisation (EBITDA) by the fiscal year 2024. S&P predicted in a note that by fiscal 2024, the combined EBITDA of India’s rated corporate and infrastructure firms would be almost 50% larger than it had been five years earlier. According to S&P, the aggregate debt is little changed, showing an increase in credit quality. What lies behind the optimistic perspective? Credit is looking good since the Indian economy has shown str

By mediology 06:09 PM Jul 05, 2023 IST

Recently, S&P
Global Ratings underlined the favourable credit climate for Indian corporations
due to rising GDP and strong corporate finances. That Indian businesses are in
“good credit shape” was one of the report’s findings.

An improvement in
credit quality was indicated by the rating agency’s forecast that rated
corporate and infrastructure entities in India would see a 50 percent rise in aggregate earnings before interest, taxation, depreciation, and
amortisation (EBITDA) by the fiscal year 2024.

S&P predicted in a
note that by fiscal 2024, the combined EBITDA of India’s rated corporate and
infrastructure firms would be almost 50% larger than it had been five years
earlier.

According to S&P, the aggregate
debt is little changed, showing an increase in credit quality.

What
lies behind the optimistic perspective?

Credit is looking good
since the Indian economy has shown strong in the face of adverse global
economic conditions and increased policy and borrowing rates, thanks to
increasing domestic demand and sector growth.

S&P expects India’s
economy will develop at the fastest rate in the region, 6.0% in 2023 and 6.9%
in 2024.

S&P also noted that
the effects of rigorous external funding constraints can be softened by having
ample liquidity at home.

In recent years, debt
reduction has been a top priority for rated companies, but the rating
organisation cautioned that increased capital expenditure could delay the rate
of deleveraging.

Median debt to EBITDA
for the rated portfolio is forecast to fall to about 2.4 by March 2024, down
from around 2.7 in the prior year, according to S&P’s projections. This indicates a
significant improvement from the month of March 2020’s ratio of 4.3.

Maintaining a firm
credit position and prudent financial management is essential for the continued
growth and stability of Indian businesses as they navigate a changing economic
landscape.

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