Indian companies will face depressed credit profiles over the coming months due to weaker demand for their products and liquidity problems, leading Indian researcher CRISIL Ltd. (BOM:500092) said on Monday.

CRISIL is a unit of Standard & Poor’s Financial Services LLC (NYSE:MHFI), and rates the creditworthiness of companies.

CRISIL’s credit ratio for the first half of this year showed that there were more credit downgrades than upgrades among companies, a trend which has lasted for the past two years.

“As much as 86 percent of the downgrades were due to demand slowdown and stretch in liquidity (caused by delays in receivables),” said CRISIL Ratings in a press release on Monday.  

“CRISIL believes these problems, along with high interest rates, mean credit quality of corporates will remain weak in the near term. … CRISIL believes downgrades will continue to outnumber upgrades over the near term, and intensity of downgrades may even increase.”

Still, the credit ratings agency noted that sectors like textiles and agriculture performed best in corporate credit upgrades. Utilities, transport and construction companies had the worst corporate credit.

Assets held by banks, too, were of shaky quality, with nonperforming assets and systemically weak assets set to grow significantly at Indian banks in the near future.