How Does a Rating Committee Decide a Rating?

Rating committees work from documented criteria and peer benchmarking rather than individual discretion, to keep outcomes consistent across similar companies.

Criteria-Based Deliberation

Each SEBI-registered agency publishes its rating methodology by sector, covering the specific financial and business factors it weighs for that industry. Committees use these published criteria as the reference framework for deciding whether a company's risk profile is consistent with a particular rating category.

Weighing Business and Financial Risk Together

The committee considers business risk and financial risk jointly rather than in isolation. A company with strong financial metrics but a structurally weak or highly cyclical business, or vice versa, is generally rated to reflect the combined picture rather than the stronger of the two dimensions alone.

Peer Comparison and Rating Consistency

Committees routinely check a proposed rating against how comparable companies in the same sector, with similar scale and financial metrics, have been rated — both to ensure internal consistency across the agency's rated portfolio and to sense-check whether the proposed rating is defensible relative to precedent.

Sensitivity and Outlook

Alongside the rating itself, committees typically assign an outlook — Stable, Positive, or Negative — reflecting the likely direction of the rating over the medium term, and often identify specific rating sensitivities that could trigger a future upgrade or downgrade.

Talk to FinMen Advisors — for help preparing for a rating exercise, write to marketing@finmen.in or call +91 77387 14680.

Disclaimer: This article is intended for general informational and educational purposes only and does not constitute financial, credit, investment, or legal advice. Credit ratings are assigned solely by SEBI-registered Credit Rating Agencies (such as CRISIL, ICRA, CARE Ratings, India Ratings, Brickwork, Acuite, and Infomerics) based on their own methodologies, policies, and the information available to them at the time of assessment. FinMen Advisors provides preparatory and advisory support to companies undergoing a rating exercise and does not issue, influence, or guarantee any rating outcome. Readers should exercise independent judgement and consult qualified professionals before making business or financial decisions.