S&P Global Ratings announced on Tuesday that Indian companies are in good credit shape due to the strong growth in the country’s economy and accommodative corporate balance sheets. According to S&P, the aggregate EBITDA for rated corporate and infrastructure entities in India will increase by approximately 50% in fiscal 2024 compared to five years ago. This improvement in credit quality is reflected in the relative stability of aggregate debt. The report highlights that rising domestic demand in India and recovery in sectors are outweighing the negative impacts of tough global economic conditions and higher policy and borrowing rates. S&P forecasts India’s economic growth rate to be the highest in the region – 6.0% for 2023 and 6.9% for 2024. The rating agency also emphasizes that strong onshore liquidity is helping to alleviate the challenges posed by difficult external-funding conditions. While rated companies have significantly reduced debt over the past three years, debt reduction will remain a key focus; however, the pace of deleveraging could be slowed by increasing capital expenditure. S&P projects that the median debt to EBITDA ratio for its rated portfolio will decrease to approximately 2.4 by March 2024, compared to 2.7 the previous year. This ratio stood at 4.3 as of March 2020.
