India Ratings and Research (Ind-Ra) has published the August 2021 edition of its Research and Ratings Compendium.

Rating action highlights: Corporate rating upgrades continued to outpace downgrades for the eight months till August 2021. For the month, Ind-Ra upgraded 30 ratings (July 2021: 22) compared to six downgrades (July 2021: 15). Improving economic activity post the second covid wave as well as faster deleveraging has continued to support the corporate credit outlook. Of the total number of reviewed ratings in August 2021, the overall positive rating actions were at 39 (July 2021: 28) and negative rating actions were 12 (July 2021: 20). 

The agency expects high-rated corporates to remain resilient, supported from their faster deleveraging and an improving business profile. However, rising inflation as well as the fear of a possible third wave and unexpected higher out-of-pocket healthcare expenses has led to the possibility of a muted consumption demand, especially on non-essentials. In line, issuers belonging specifically to the hospitality sector in the Discretionary bucket continued to see some stress, affected by the continued COVID-19 challenges and delays in business recovery. 

The corporate credit profile has shown resilience during the second COVID wave, having learnt the lesson through the first wave, thereby raising optimism for a faster-than-expected overall recovery. Furthermore, ebbing of the second wave and lifting of COVID-19 related restrictions in most states coupled with the upcoming festival season could support consumption demand, as is visible with several high frequency indicators showing a faster-than-expected rebound, and through an improvement in GST revenue collections. Additionally, exports volumes growth showed a surprise turnaround, indicating a revival backed by a favourable global trade outlook. Ind-Ra expects GDP to grow 9.4% in FY22. 

Non-discretionary and Industrial buckets saw the highest proportion of positive rating actions. 24% of the issuers from the Non-Discretionary bucket saw an upward trend in their ratings. Issuers belonging to renewable power, healthcare and food & beverages witnessed rating upgrades. Improvements in operational profile led by successful commissioning of projects, faster-than-expected deleveraging and improvement in liquidity post equity infusion were the major driving factors. Negative rating actions in this bucket were mainly from the food & beverages sector, which were led by challenges arising out of COVID-19 largely in export markets.


Metals & mining, construction materials and chemicals saw positive rating actions in the Industrials bucket. Improvements in financial metrics amid a higher-than-expected debt reduction and successful capacity expansions leading to an improvement in the overall scale of operations were the main reasons. Issuers belonging to capital goods and construction material faced negative rating actions (including one to default) in this bucket. Delays in order book execution leading to drying up of liquidity and impact on revenues due to increasing competition were the major reasons. 


Positive rating actions in the Discretionary bucket were seen in issuers belonging to consumer durables and textiles. Better-than-expected growth in operating performance due to improved product mix or improvements in financial metrics post pre-payment of debt were the major reasons. No negative rating actions were seen in this bucket. 

The Essential bucket saw minimal rating actions, with one issuer belonging to the pharmaceuticals sector upgraded, driven by better-than-expected top line growth with launch of new products. There were no negative rating actions in this bucket. 

Rating actions in Financial Institutions continued to be minimal, although positive rating actions were seen due to a better-than-expected improvement in assets under management and overall franchise, despite challenging conditions. A negative rating action (including one to default) was seen due to the expected weakening in capitalisation or lapses in the original maturity date. 

In Structured Finance as well, rating actions were minimal with two loan pools facing a positive rating action, reflecting an improvement in credit enhancement. 

Sectoral Rating Actions during June-August 2021:
During June-August 2021, issuers belonging to metals & mining, pharma & biotech and toll roads saw the highest proportion of positive rating actions. A faster-than-expected demand improvement as well as higher realisations leading to improvements in operational profile were the key reasons. Consequently, most of the rated issuers used these cashflows towards deleveraging, leading to an improvement in financial metrics. Whereas, in the pharmaceuticals & biotechnology sector, 59% of the issuers saw rating upgrades. The primary driving force for the improved financial metrics has been strong revenue growth supported by the successful launch of new products or a spurt in demand of existing products, leading to faster deleveraging. Other sectors which saw a high number of upgrades during the period were toll roads, construction materials, capital goods, food & beverages and auto & auto components. 

Negative rating actions were mainly seen in issuers belonging to the capital goods, hotels & hospitality and renewable power sectors during June-August 2021. 

The agency has been continuously monitoring the on-ground situation among its rated universe and the sectors at large, and transparently communicating to the market its views, forecasts and its assumptions and the rating sensitivities through sector-specific webinars and research reports. 

The August 2021 edition of Research and Ratings Compendium among others includes the following key topics:

1.      A summary of the rating actions taken during August 2021

2.      Ind-Ra’s revised FY22 GDP growth forecast

3.      Improvement in the domestic formulation market

4.      Impact of semiconductor chip shortage on passenger vehicles sales


The compendium is freely available for download from our website www.indiaratings.co.in.

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Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

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Analyst Names

  • Jyoti Chauhan

    Analyst
    India Ratings and Research Pvt Ltd Wockhardt Towers, 4th Floor, West Wing, Bandra Kurla Complex, Bandra East,Mumbai - 400051
    +91 22 40356119

    Suparna Banerji

    Associate Director
    9920576160

    Media Relation

    Ankur Dahiya

    Manager – Corporate Communication
    +91 22 40356121