MCR continues to be close to 3 year highs
CARE's modified credit ratio (MCR), the ratio of (upgrades and reaffirmations) to (downgrades and reaffirmations) has shown slight decline to 1.23 in Q3FY2015 from 1.25 in Q2FY2015. However, MCR has witnessed a significant improvement in the current fiscal with MCR at 1.23 in Q3FY2015 continues to be close to 3 year highs, reflective of the continued improvement in the credit quality of the rated entities.
Credit Quality - Large Enterprise (LE) and SME
CARE observes credit quality of the Large enterprises to be superior and steadier, especially since Q1 FY14. The Large enterprises have recorded a MCR of above 1 for the last 6 quarters, reflecting stable and improving credit conditions. The last 2 quarters i.e. Q2 FY15 and Q3 FY15 have seen a sharp improvement in the MCR of the LE segment to 1.29 and 1.20 respectively. Likewise, the SME segment too has been recorded an MCR of above 1 since the last 5 quarters, with the latest quarter gone by seeing the MCR touch a high of 1.31.
There has been a significant increase in the number of upgrades in the LE segment in the ongoing fiscal. In absolute number, 430 entities have seen their ratings being upgraded during Q1 to Q3 FY15, compared to the 343 entities that saw a rating upgrade in the whole of FY14. The comparative figures for upgrades for the SME segment have been 178 in the 3 quarters of FY15 and 174 in FY14.
Trend in Rating Movement
The trend in rating movements in CARE rated entities shows that upgrades have been outnumbering downgrades, since Q2 FY14. Also, a higher number of entities have had their ratings being reaffirmed. In Q3 FY15, 294 entities saw their ratings being upgraded, 106 entities had their ratings downgraded and 703 entities had their ratings being reaffirmed. There has been a rather sharp increase in the number of upgrades in Q3 FY15. A year on year comparison shows that the number of entities who have seen their ratings been upgraded has nearly doubled and fewer entities have seen their ratings being downgraded. In Q3FY14, 153 entities recorded a rating upgrade, 120 entities a rating downgrade and 676 entities saw their ratings being reaffirmed.
There has been a notable improvement in the credit quality across sectors in FY15 as is evident from table 1 above.
* The sectors that have recorded a higher number of upgrades and have seen a noteworthy improvement in their MCR levels above 1 (which indicates stability in credit quality) includes - construction, auto, textiles, pharmaceuticals, agriculture & allied activities, rubber & plastics Products, food products, telecom, paper & paper products, education, apparel manufacture, electricity (generation), wholesale and retail trade, chemicals, ceramics, printing, metal fabrication, electrical equipment, real estate activities, computer hardware, electronic & optical products, transportation & storage, communication, coke & refined petroleum product and crude oil & Natural Gas extraction.
* Sugar, water supply & sewerage, beverages, mineral mining and cement sectors have seen a moderation in their credit quality in FY15. These sectors however, enjoy stable credit quality as indicated by their MCR of 1 or above.
* The coal mining sector has seen a deterioration in credit quality. The MCR for the sector has fallen from 0.71 in FY14 to 0.57 in the current fiscal.
CARE's modified credit ratio (MCR), the ratio of (upgrades and reaffirmations) to (downgrades and reaffirmations) has shown slight decline to 1.23 in Q3FY2015 from 1.25 in Q2FY2015. However, MCR has witnessed a significant improvement in the current fiscal with MCR at 1.23 in Q3FY2015 continues to be close to 3 year highs, reflective of the continued improvement in the credit quality of the rated entities.
Credit Quality - Large Enterprise (LE) and SME
CARE observes credit quality of the Large enterprises to be superior and steadier, especially since Q1 FY14. The Large enterprises have recorded a MCR of above 1 for the last 6 quarters, reflecting stable and improving credit conditions. The last 2 quarters i.e. Q2 FY15 and Q3 FY15 have seen a sharp improvement in the MCR of the LE segment to 1.29 and 1.20 respectively. Likewise, the SME segment too has been recorded an MCR of above 1 since the last 5 quarters, with the latest quarter gone by seeing the MCR touch a high of 1.31.
There has been a significant increase in the number of upgrades in the LE segment in the ongoing fiscal. In absolute number, 430 entities have seen their ratings being upgraded during Q1 to Q3 FY15, compared to the 343 entities that saw a rating upgrade in the whole of FY14. The comparative figures for upgrades for the SME segment have been 178 in the 3 quarters of FY15 and 174 in FY14.
Trend in Rating Movement
The trend in rating movements in CARE rated entities shows that upgrades have been outnumbering downgrades, since Q2 FY14. Also, a higher number of entities have had their ratings being reaffirmed. In Q3 FY15, 294 entities saw their ratings being upgraded, 106 entities had their ratings downgraded and 703 entities had their ratings being reaffirmed. There has been a rather sharp increase in the number of upgrades in Q3 FY15. A year on year comparison shows that the number of entities who have seen their ratings been upgraded has nearly doubled and fewer entities have seen their ratings being downgraded. In Q3FY14, 153 entities recorded a rating upgrade, 120 entities a rating downgrade and 676 entities saw their ratings being reaffirmed.
There has been a notable improvement in the credit quality across sectors in FY15 as is evident from table 1 above.
* The sectors that have recorded a higher number of upgrades and have seen a noteworthy improvement in their MCR levels above 1 (which indicates stability in credit quality) includes - construction, auto, textiles, pharmaceuticals, agriculture & allied activities, rubber & plastics Products, food products, telecom, paper & paper products, education, apparel manufacture, electricity (generation), wholesale and retail trade, chemicals, ceramics, printing, metal fabrication, electrical equipment, real estate activities, computer hardware, electronic & optical products, transportation & storage, communication, coke & refined petroleum product and crude oil & Natural Gas extraction.
* Sugar, water supply & sewerage, beverages, mineral mining and cement sectors have seen a moderation in their credit quality in FY15. These sectors however, enjoy stable credit quality as indicated by their MCR of 1 or above.
* The coal mining sector has seen a deterioration in credit quality. The MCR for the sector has fallen from 0.71 in FY14 to 0.57 in the current fiscal.
