Moody’s Investors Service says that the credit profiles of rated non-financial companies in India (Baa2 stable) will continue to improve through 2019, despite external headwinds.
“Revenue will grow for most Indian industries, despite external risks,” says Saranga Ranasinghe, a Moody’s Assistant Vice President and Analyst.
“The steel, mining and auto sectors in particular will benefit from strong GDP growth, which will in turn support domestic demand,” says Kaustubh Chaubal, a Moody’s VP and Senior Credit Officer.
“As for the rupee’s depreciation against the US dollar, such a situation will have limited negative credit implications for rated Indian corporates because most rated Indian-based corporates have protections in place including natural hedges, some US dollar revenues and financial hedges,” Ranasinghe added.
Moody’s also says that refinancing risk will be manageable for most Moody’s-rated Indian corporates.
On the telecommunications sector, Moody’s says that these companies’ capital spending levels, and therefore leverage, will stay high, absent inorganic deleveraging initiatives, due to intense competition. Downstream oil refiners too will see elevated levels of capital spending as they look to increase refining capacity in line with demand growth.
As for oil companies and the IT services industry, Moody’s says that these companies’ high shareholder returns could lead to a rise in debt levels and leverage.
With the steel and auto supplier’s sectors, Moody’s says that industry consolidation for companies in these sectors will continue through 2019. While this would lead to improved business profiles, any debt funded acquisitions may lead to elevated leverage levels. – indiainfoline