Indian corporates to see improved credit profiles in 2018: Moody's

GN Bureau | November 22, 2017


#GDP   #Moodys EBITDA   #GST  


Indian corporates will see improved credit profiles in 2018 on solid economic and EBITDA growth, while their cross-border bond maturities for the next three years are manageable, says Moody's Investors Service.

The latest rating comes close on the heels of Moody’s upgrading the country’s sovereign ratings to Baa2 with a stable outlook.

"Disruptions from GST implementation will diminish and economic activity will recover, and we expect that domestic GDP growth of around 7.6% will result in higher sales volumes, which -- along with new production capacity and benign commodity prices -- will support Earnings before interest, tax, depreciation and amortization (EBITDA) growth of 5%-6% over the next 12 to 18 months," says Kaustubh Chaubal, a Moody's vice president and senior analyst.

"Moreover, refinancing needs in 2018 will be manageable for most companies, given their improving access to the capital markets and their large cash balances, and -- as indicated -- their cross-border bond maturities will also be manageable for the next three years," says Saranga Ranasinghe, a Moody's assistant vice president and analyst.

Moody's conclusions are contained in its just-released presentation, "Non-financial corporates -- India, 2018 Outlook".

Downside risks include GDP growth falling below 6% and/or a weakening of commodity prices, resulting in lower EBITDA growth; a slowdown in the pace of reform and political uncertainty; and higher interest rates brought on by rising inflation and/or exchange-rate volatility, resulting in a tight funding environment.

Upside risks include a further simplification of GST and other structural reforms, or an improvement in commodity prices, resulting in higher EBITDA growth; or an improvement in asset valuations, providing a means of deleveraging for some corporates.

For the key sectors, the outlook for energy exploration and production is stable, as stable production volumes, a low subsidy burden and relatively stable oil and gas prices sustain earnings at current levels. The outlook is also stable for refining and marketing as capacity additions and higher margins increase earnings.

Other sectors with stable outlooks include real estate, with sales volumes picking up; ferrous metals and mining, with growing domestic demand and higher production; non-ferrous metals and mining, with improved fundamentals and supply deficits; auto and auto suppliers, with higher sales volumes and new product launches; and IT services, with Indian companies remaining in the forefront in this area.

Only the telecoms sector has a negative outlook as intensifying competition will continue to pressure revenues and margins over the next 12 months, while industry consolidation will result in the emergence of three big players.

Comments

 

Other News

Here’s an I.D.E.A. for career growth and success

Success in today’s professional organisation is no longer solely determined by academic qualifications, technical expertise or years of experience. While these attributes do matter, organisations increasingly value individuals who demonstrate the right mindset and behavioural qualities. The ability

PM interacts with CEOs, founders of space startups

Prime minister Narendra Modi interacted with CEOs and Founders of 20 Space Startups at Seva Teerth on Friday.   CEOs of leading companies in the space sector working in diverse fields ranging from building rockets and reusable semi-cryogenic launch vehicles, avionics, satelli

From one cow to a dairy business

In 2012, Anita Dash wasn`t dreaming of building a dairy brand. She wasn`t studying business models or planning market expansion. Like countless mothers across India, her focus was on something much simpler: giving her children a better future.   At the time, her most valuable

Ethanol blending: The two sides of a story

India`s crude oil consumption is estimated to be around 88.5% imported from abroad. This one single figure is also responsible for why ethanol has become both an economic strategy and fuel policy at the same time. In an economy like India, which depends so heavily on foreign oil, any increase in internat

Food inflation: Not a macroeconomic statistic but a developmental indicator

India`s retail inflation shows a reassuring picture at first glance. According to the latest data, Consumer Price Index (CPI) inflation edged up to 4.38% in June 2026 from 3.93% in May 2026, but continued to remain within the Reserve Bank of India`s (RBI) target band of 4% (+/- 2%). However, beneath this

Skin in the game or masterful market timing?

When a company founder opens their personal chequebook to buy shares in their own business, stock markets usually applaud. To the average retail investor, it feels like the ultimate vote of confidence, a sign that the people running the show have real skin in the game and believe brighter days are ahead.

Upcoming Conferences



-->

Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter