Stories
India Inc to Withstand Rate Hike, El Nino Impact: Crisil
- •Crisil Ratings states India Inc can manage a 50 bps rate hike by RBI, citing structural strengths and deleveraged balance sheets.
- •El Nino-led rainfall shortfall is unlikely to significantly impact rural demand, as non-crop incomes contribute over 40% to agricultural output.
- •Geopolitical tensions from the US-Israel conflict are not expected to harm corporate India, with Crisil maintaining a stable credit outlook.
- •The credit ratio (upgrades to downgrades) for Crisil's portfolio improved to 2.18 times in H1FY27 from 1.5 times in H2FY26, indicating better credit quality.
- •Stress tests reduced sectors at risk from geopolitical tensions to three (diamond polishers, specialty chemicals, polyester textiles) from six.
Key Questions Answered
According to Crisil Ratings, corporate India can comfortably weather a widely expected 0.50 percentage point rate hike during the remainder of the calendar year. The agency noted that Indian companies are well-cushioned by structural strengths, including leveraged balance sheets.
Crisil Ratings stated that the El Nino-led rainfall shortfall is unlikely to dent rural demand. The agency pointed out that non-crop incomes account for over 40 percent of agricultural output, and policy measures will also help support the economy.
Subodh Rai, the managing director of Crisil Ratings, stated that diamond polishers, specialty chemicals, and polyester textiles continue to be at risk because of the US-Israel conflict in the Middle East. Meanwhile, sectors like airlines, ceramics, and flexible packaging have seen their credit quality outlook upgraded to stable.
