Cash flow of small- and mid-sized firms is likely to remain under stress as they adjust to the Goods and Services Tax structures, ratings agency Crisil said on Tuesday. Investment-linked sectors, such as real estate and capital goods, are also likely to struggle moving forward, it said in a report.

A high amount of stressed assets in the banking sector continues to choke the economy, but barring that, companies are likely to see their balance sheets improve from now on, according to the Crisil report. Lower interest rates, strong commodity prices and improving domestic demand will support their growth.

In its latest ratings update, as many as 817 companies under Crisil’s ratings ambit got a credit rating upgrade in April-September, as compared with 434 that got downgrades. This means the credit ratio – the ratio of the upgrades against downgrades – was 1.88, higher than 1.22 for 2016-’17.

“This indicates that the trend of recovery in credit quality has sustained for a year now,” said Crisil Ratings Chief Analytical Officer Pawan Agrawal.