Balance sheets of top 1,000 listed companies show deleveraging trend

New Delhi: Balance sheets of Indian corporates are demonstrating deleveraging initiatives, CareEdge Ratings said.

The gearing trend of the top 1,000 listed companies as per market capitalisation showed that the average gearing declined from 1.02 on March 31, 2014, to 0.53 on March 31, 2023, the agency said.

Mehul Pandya, MD & Group CEO, CareEdge Ratings, said the agency's credit quality assessment for the period from October 2023 to March 2024 sheds light on the narrative of buoyancy of Indian corporates amid global challenges.

“This metric, which quantifies the ratio of upgrades to downgrades during a specific timeframe, exhibited a broad-based uplift as compared to the preceding periods. Specifically, the credit ratio surged to 1.92 from its previous standing of 1.67. It is noteworthy that the credit ratio has consistently remained well above its long-term average," Pandya said.

Pandya also said the strong performance of corporate India is underpinned by healthy domestic demand, enhanced profitability, and deleveraging efforts.

The infrastructure sector has continued its robust trend with project commissioning, better realisations, and the government’s persistent backing of the sector. The financial sector’s credit ratio, though moderated, stood strong.

The credit ratio in the half year ended March 2024 is at 1.92, up from 1.67 in H1FY24. There were 357 upgrades and 186 downgrades in H2FY24.

The credit ratio had shown a normalising trend in the last two-and-a-half years, after peaking in H1FY23.

The ratio in H2 at 1.92 is comfortably above the long-term average of the credit ratio for the last 10 years, which is around 1.57, CareEdge Ratings said.