Ratings Criteria & Methodologies
Our ratings criteria define the framework we use to assess creditworthiness across industries and instruments, ensuring consistency, transparency, and compliance with SEBI guidelines.
Each rating issued by ACER is backed by a published methodology, outlining the factors, weightages, and benchmarks considered in the assessment.
A Transparent Approach to Credit Ratings
Clear criteria. Consistent evaluation. Reliable outcomes.
What Are Ratings Criteria?
Ratings criteria are structured, pre-defined frameworks that outline the key parameters used to evaluate credit risk. They ensure every rating decision is objective, consistent, and aligned with industry standards.
We update our criteria periodically to reflect market dynamics, regulatory changes, and evolving best practices.
criteria categories
Corporate Issuers
Evaluates operational performance, industry risk, financial strength, and governance for manufacturing and service companies.
Banks & Financial Institutions
Assesses capital adequacy, asset quality, earnings, and risk management.
Infrastructure & Project Finance
Focuses on cash flow predictability, contractual arrangements, and sponsor strength.
Structured Finance
Examines asset pool quality, credit enhancement, and transaction structure.
Sovereigns & Public Sector Entities
Considers fiscal metrics, political stability, and external balances.
Key Evaluation Parameters
| Parameter | Definition | Example Metrics |
|---|---|---|
| Leverage & Coverage | Measures debt burden and repayment ability | Debt/Equity, DSCR, Interest Coverage |
| Profitability | Earnings performance | EBITDA Margin, ROCE |
| Liquidity | Cash flow adequacy | Current Ratio, Operating Cash Flow |
| Industry Position | Competitive strength | Market Share, Pricing Power |
| Governance & Transparency | Management integrity and disclosure quality | Audit Quality, Board Structure |
ACER is engaged in the business of providing credit ratings and other permitted services and does not provide investment advice or recommendations, directly or indirectly, with respect to any securities. Ratings are subject to ongoing surveillance, revision or withdrawal, as and when warranted.
Information used in assigning ratings has been obtained from sources believed to be reliable, including the rated entity; however, such information has not been independently audited or verified by ACER. While reasonable care has been exercised to ensure that the information contained herein is true and fair, it is provided “as is”. ACER does not make any representation, warranty of any kind, or guarantee the accuracy, adequacy, suitability or completeness of any information or its fitness for a particular purpose.
All ratings and related analyses are statements of opinion, and ACER is not liable for any losses, direct or indirect, arising from use of this publication or its contents. Users are advised to exercise their own judgment and due diligence before making any decision based on the ratings.
FAQ
At least once annually, or when significant market/regulatory changes occur.
Yes, criteria may be updated. Any changes are applied prospectively, not retroactively.
Yes, each sector follows specific criteria. These reflect industry risks, regulations, and practices.