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Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has maintained an improving outlook for the mid-corporate (MEC) sector for FY23. In line with the agency’s expectations, operating margins have improved in FY22 across some key sectors; however, it has come at the cost of a working capital build-up. The Guaranteed Emergency Credit Line (GECL) has helped these entities to meet the liquidity gap.

According to the report, MECs in some of the key sectors such as steel and textiles have witnessed a V-shaped recovery in FY22 while hospitality and auto ancillary remain weak. Ind-Ra has provided a snapshot of the sector-wise performance of MECs, focusing on the key sectors where these entities are largely concentrated. The agency has specifically focused on how the liquidity and overall performance pre- and post-COVID-19 and the outlook for FY23.

The rating agency maintained a stable rating outlook for its MEC-rated portfolio for FY23, on account of the fair amount of liquidity support and also the major initiatives been taken by the finance ministry in rendering its support in the form of GECL and one-time loan recasting, leading to the frequency of negative rating actions likely to mellow down in FY23.