Indian corporates' metrics to improve in FY26: Fitch Ratings

Fitch Ratings expects aggregate revenue for these corporates to decline by 3 per cent in FY26, in line with the estimated 3 per cent drop in FY25. The decline will be primarily driven by a high single-digit fall in revenue from oil and gas production, as well as oil refining and marketing companies. However, Fitch anticipates EBITDA margins for the rated corporates to improve to around 16 per cent in FY26 (FY25 estimate: 14 per cent), supported by lower input costs, cost-saving initiatives, an improved product mix, and pricing gains.

The median EBITDA net leverage is likely to fall to 3.1x in FY26 (FY25 estimate: 3.6x), as EBITDA growth offsets high capex-driven negative free cash flow in many sectors. It is believed that higher US tariffs will have a limited direct impact on the corporates due to generally low to moderate US export exposure, though there are risks from excess supply being diverted to India and weaker global growth.

Fitch Ratings expects funding needs in FY26 to be supported by adequate cash buffers at many of the corporates, softening onshore bond yields, the banking sector’s healthy balance sheets and the likelihood of further interest-rate cuts in 2025 amid a steady GDP growth outlook for India.

ALCHEMPro News Desk (RR)