India’s corporate credit metrics are expected to strengthen in FY26, according to Fitch Ratings. The improvement will stem from steady GDP growth, enhanced banking sector health, and anticipated interest-rate cuts in 2025. Wider EBITDA margins, despite high capital expenditure intensity, will drive this progress.
Fitch outlined these findings in its January update of the ‘India Corporates Credit Trends’ report. The report also highlighted risks such as rising energy prices due to geopolitical tensions, rupee depreciation, and adverse trade policies affecting exports.
Interest Rate Cuts To Support Credit Access
Fitch projects that the Reserve Bank of India (RBI) will cut interest rates in 2025. This expectation follows the RBI’s recent liquidity measures, including a 50-basis-point reduction in the cash reserve ratio. These policy moves aim to enhance credit access for corporates.
Sales growth for Fitch-rated companies will remain modest at 1–2% in FY26. Lower prices in oil and gas will limit growth, while other sectors will see mixed outcomes.
Fitch forecasts India’s GDP to grow at 6.5% in FY26, with infrastructure spending boosting demand for cement, electricity, and steel. IT services may see mid-single-digit growth as overseas clients curb discretionary spending. Auto suppliers will experience slower sales growth due to declining domestic demand and exports.
Meanwhile, telecom revenues will rise due to tariff hikes, while the pharmaceutical sector will benefit from steady demand. Challenges persist for the travel, tourism, and chemical industries due to global oversupply and moderate recovery.
Fitch expects oil and gas companies to face declining sales despite volume growth, driven by falling prices. However, infrastructure-led demand remains a key driver for overall growth in FY26.
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