Fundamental Glossary / Indian Stock Market-Specific Fundamentals
Credit Rating
An agency's opinion of the creditworthiness of a borrower or a specific instrument.
Formula
Expressed on a scale. For an instrument, AAA is the top of the long-term scale used by Indian agencies. A rating watch or a outlook (stable, positive, negative) sits beside the grade.
What it means
The rating is about the chance of timely payment of interest and principal. It is not a recommendation on the equity, and it is not a measure of how cheap the shares are.
A downgrade raises the cost of debt and can trigger covenants. That path runs from the credit opinion to the equity value.
How to read it
The direction matters as much as the grade. A BBB with a negative outlook is a different trajectory from a BBB with a stable outlook.
What to watch
Ratings can lag. An issuer can deteriorate between reviews. Read the rationale, the date, and the company's own liquidity, not only the letters.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.