The CICI hit a nine-quarter low of 58 out of 200, continuing a largely declining trend since its inception during the first quarter of FY19 when it recorded a score of 119.
The quarterly index evaluates 47 industries based on six parameters covering financial performance, credit worthiness and outlook.
“Revenues growth, interest coverage ratio and MCR (Modified Credit Ratio) are among the 6 parameters that showed the highest signs of strain across industries,” the report said.
The latest reading, calculated in comparison to last year’s levels, came after a previous low of 62 during the final quarter of the last fiscal.
Grading responses as ‘improved’, ‘remained same’ and ‘worsened’, the CICI found 64% or 179 of the 282 responses received were in the worsened category.
“Of the 47 industries, 39 industries witnessed a decline in revenue growth, 21 industries witnessed fall in operating margins, 25 witnessed adverse fluctuation in pricing, 29 industries witnessed fall in the modified credit ratio and 38 industries witnessed deterioration in interest coverage ratio, during Q1-FY21 when compared on a YoY basis, the report said.
While most industries reported worsening conditions under the various parameters, tractors, agrochemicals, fertilizers, drugs and pharmaceuticals showed an improvement in the first quarter of the fiscal, it said.
Since the first quarter of FY19 fewer industries have reported an improvement in conditions which means an increasing number of industries have shown deterioration in performance across various parameters over the past few quarters, CARE Ratings said.
A decline in the number of industries reporting no change in conditions since the last quarter of FY19 implied falling stability, the number of ‘worsened’ responses rose sharply since that fiscal indicating sluggish performance, it said.
“We do expect GDP growth to turn positive in Q4 and this could be the turning point for CICI. Also, the level of negative growth in GDP is to be less severe in the next two quarters and these points too would need to be monitored closely,” it said.