India's infrastructure, power, and commercial real estate sectors are expected to remain the primary engines of funding activity in the second half of FY27, backed by sustained project execution, healthy cash flows, and continued public-sector spending, according to a report released by Brickwork Ratings (BWR) on 15 October 2026. The findings offer a forward-looking read on where credit demand will concentrate as the fiscal year progresses.

Credit Profile Stays Resilient Despite Headwinds

India Inc's credit profile held firm through the first half of FY27 (April–September 2026), even as the economy navigated elevated crude oil prices, below-normal monsoon rainfall, and tighter global financial conditions. Data compiled from major domestic rating agencies confirmed that upgrades continued to significantly outnumber downgrades during the period, reflecting the underlying strength of corporate balance sheets.

Notably, the ratio of upgrades to downgrades improved to 2.7 times in H1FY27, up from 2.4 times in the corresponding period a year earlier. The number of downgrades fell 11 per cent year-on-year, while upgrades remained broadly stable. Among all rated entities, positive rating actions accounted for 35 per cent of all reviews undertaken, with upgrades outpacing downgrades by 3.3 times.

Sectors Leading Upgrades — and Those Under Pressure

K. H. Patnaik, Chief Ratings Officer at BWR, attributed the upgrade momentum to a specific set of industries. 'Infrastructure, power, capital goods, auto components and secondary steel led upgrades, supported by public spending and steady domestic demand,' Patnaik said.

On the other side of the ledger, textiles, ceramics, diamonds, and specialty chemicals faced pressure from weak exports and competition from cheaper imports, he added. These sectors reflect India's ongoing vulnerability to global demand softness and import competition, a challenge that policy has yet to fully address.

Corporate Leverage Improves; Banking Credit Surges

The report also highlighted a steady improvement in corporate leverage. Debt-to-equity levels for rated companies declined to approximately 0.7 times in FY25, down sharply from 1.1 times in FY20 — a five-year deleveraging trend that strengthens balance-sheet resilience heading into H2FY27.

Meanwhile, credit growth in the banking system remained robust. Non-food bank credit expanded 18.8 per cent year-on-year in August, sharply higher than the 10.2 per cent growth recorded a year earlier. The services sector was a key contributor, with lending rising 24.3 per cent during the same period. Commercial real estate emerged as a standout driver, supported by strong office demand across major markets.

NBFC Outlook: Gold Loans Buoyant, Microfinance Under Stress

Lending to non-banking financial companies (NBFCs) is likely to remain supported by strong demand for gold loans and loans against property in H2FY27, according to BWR. However, smaller NBFCs with significant exposure to the microfinance segment continue to face stress — a pressure point that has persisted across multiple rating cycles and remains a watch item for regulators.

In contrast, corporate bond issuances declined 34 per cent during April–June 2026, suggesting that companies are increasingly leaning on bank credit rather than capital markets for their funding needs. How this dynamic evolves in the second half will be closely watched by both issuers and investors.

What to Watch in H2FY27

With infrastructure and power pipelines deep and public capex commitments intact, the funding environment for these sectors looks stable. The key risks — crude prices, a sluggish monsoon's lagged effect on rural demand, and global rate volatility — have not fully receded. A sustained pickup in exports for stressed sectors like textiles and specialty chemicals would be necessary to broaden the upgrade cycle beyond its current concentrated base.