Indian Corporations Poised for Enhanced Credit Metrics in 2025-26: Fitch

Mumbai, Jan 13 (NationPress) The credit metrics of rated Indian corporations are anticipated to see an upturn in the following financial year (April 2025-March 2026), driven by broader EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins, despite high capital expenditure intensity, according to the most recent Fitch report.

Fitch's report titled ‘India Corporates Credit Trends: January 2025’ indicates that enhancing leverage will enable most corporations to sustain adequate rating flexibility.

"We foresee India's consistent GDP growth outlook, the banking sector's improved financial condition, and probable interest rate reductions in 2025 to bolster overall credit accessibility for corporations in FY26," the report elaborates.

There is a broad anticipation that the Reserve Bank of India will lower interest rates in 2025 after it eased liquidity by reducing the cash reserve ratio (CRR) by 50 basis points during its policy review meeting last month.

Fitch also predicts India’s GDP growth at 6.5 percent along with substantial infrastructure investment, which will support strong demand for cement, electricity, petroleum products, steel, and engineering and construction (E&C) firms throughout FY26.

Sales for oil and gas production and oil marketing companies (OMCs) are expected to decrease in low-single digits as declining prices offset a low-to-mid single-digit volume growth, according to the report.

Fitch forecasts total sales growth for Fitch-rated corporations to remain constrained to 1-2 percent in FY26 (compared to an FY25 forecast of 1.5 percent), primarily reflecting the effects of lower prices on oil and gas upstream, refining, and marketing companies, while other sectors will experience varied growth.

Only mid-single-digit sales growth is anticipated for IT service firms, as clients in essential overseas markets curtail discretionary spending due to sluggish economic growth prospects.

Sales growth for auto suppliers will slow to mid-single digits amid reduced volume growth in the domestic market and diminished exports.

The travel and tourism sector is expected to continue its demand recovery, albeit at a modest rate. Global oversupply will persist in applying pressure on prices for chemical companies.

Revenue growth for telecom operators will benefit from tariff hikes, while the pharmaceutical sector will continue to see support due to its non-discretionary nature and favorable sector trends, Fitch noted.

Nevertheless, potential downside risks could arise if energy prices surge significantly due to ongoing geopolitical tensions, sustained downward pressure on the Indian rupee, or unfavorable trade protectionist measures hindering exports, the report concluded.