Fitch: India's Steady GDP Growth to Bolster Corporate Credit Access by FY26

Fitch Ratings predicts India's GDP growth, improved banking health, and potential 2025 interest-rate cuts will enhance corporate credit access by FY26. Though fiscal improvements are expected, risks like energy price surges and geopolitical issues may pose challenges. Energy, IT, and telecom sectors will experience varying growth trajectories.

Fitch Ratings has announced that India's steady GDP growth, improved banking sector health, and anticipated interest-rate cuts in 2025 are poised to facilitate credit access for corporations in the financial year of 2026. The strengthening credit metrics are projected to be driven by wider EBITDA margins, despite elevated capital expenditure.

However, significant risks linger, including potential energy price hikes due to geopolitical tensions, pressure on the Indian rupee, and protectionist trade measures affecting exports. The Reserve Bank of India's likely interest rate cuts in 2025 follow its recent policy changes, such as the cash reserve ratio reduction.

Fitch forecasts minimal sales growth for corporates, particularly due to decreasing oil and gas prices, while sectors like infrastructure, telecom, and pharmaceuticals may see more stable demand. IT services and automotive industries expect moderate sales increases, influenced by consumer spending patterns and global economic conditions.

(With inputs from agencies.)