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Fitch Ratings in its January update of the 'India Corporates Credit Trends' report has said that India's steady GDP growth outlook, improved banking sector's financial health and expected interest-rate cuts in 2025 will support credit access for corporates in FY26. The credit metrics of rated Indian corporates is expected to improve in FY26 (April 2025-March 2026) driven by wider EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins, despite high capex intensity. However, it stated downside risks could materialise if energy prices rise significantly given ongoing geopolitical risks, a sustained downward pressure on the Indian rupee or adverse trade protectionist measures dampening exports.

Further, it said there is a widespread expectation that the Reserve Bank of India would cut interest rates in 2025 after it eased liquidity by lowering the cash reserve ratio (CRR) by 50 basis points in its policy review meeting last month. Fitch expects aggregate sales growth for Fitch-rated corporates to remain limited to 1-2 per cent in FY26 (FY25 forecast: 1.5 per cent), mainly reflecting the impact of lower prices on oil and gas upstream, and refining and marketing companies, while other sectors will see varying growth.

It stated ‘We expect India's GDP growth of 6.5 per cent and robust infrastructure spending to underpin healthy demand for cement, electricity, petroleum products, steel, and engineering and construction (E&C) companies during FY26.’ Moreover, it said sales will decline in low-single digits for the oil and gas production and oil marketing companies (OMCs) as lower prices counterbalance a low-to-mid single-digit volume growth. Fitch expects only mid-single-digit sales growth for IT service companies, as customers in key overseas markets limit discretionary spending in light of slow economic growth prospects.

It also said Auto suppliers' sales growth will moderate to mid-single digits amid slower volume growth in the domestic market and lower exports. Demand recovery in the travel and tourism industry will continue, albeit at a moderate pace. Global oversupply will continue to weigh on prices for chemical companies. It added revenue growth for telecom companies will be supported by tariff increases while that for the pharmaceutical sector will remain aided by its non-discretionary nature and favourable sector trends.