India Ratings & Research has maintained an overall stable rating outlook for large corporates for the second half of the fiscal year (H2FY24). This is on the back of broad-based recovery and improved balance sheets through this cycle.

However, Vivek Jain, director of Corporate Ratings at India Ratings & Research in an interview with CNBC-TV18 stated that capex has not been broad-based, but is occurring in select sectors like power, oil & gas, and the EPC segment.

"Capex has not been very broad-based, it is occurring in select sectors- three sectors account for the bulk of the capex which power, oil and gas, and the EPC segment so to say and that continues to happen. Also incrementally the capex is largely brownfield rather than greenfield and that is the point when you start seeing those animal spirits back and people spending on new capex, so that seems to be missing- we are still on the brownfield mode," Jain said.

According to India Ratings portfolio, 82% of corporates have a stable outlook as of October 31,2023, unchanged year on year. It also finds that barring export-oriented sectors- recovery in large corporates has been generally broad based.

While balance sheets of corporates have improved through this cycle, household leverage has crept up and government deficit also remains fairly elevated.

As a result, it says sectors like commodity, chemicals, construction, textiles and tier-II realty players could remain vulnerable to a slowdown in growth and elevated costs.

Watch accompanying video for entire conversation.