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

Mobile phones in classroom: redirect, not eliminate

In this era of AI and classrooms filled with students glued to their cellphones, there is a need to focus on redirecting, but not eliminating, the distraction. While there is no doubt that we need to go back to the older ways of teaching such as taking oral viva exams, practicing ‘sthithprajana&rsquo

Four Labour Codes come into effect to simplify, streamline labour laws

Four Labour Codes - the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 have come into effect , rationalising 29 existing labour laws. By modernising labour regulations, enhancing workers` welf

Governance as ‘cyborg’: Rethinking AI rules through philosophical lens

In the world of science fiction, the cyborg, a hybrid of human and machine, often evokes fascination and fear. However, American scholar Donna Haraway conceptualises cyborg as more than a futuristic body; it is a philosophical lens, a way of thinking about identity, agency, and responsibility in a world wh

The process, not the verdict, is often the real punishment

When we talk about criminal justice in India, most people think about the final verdict — whether someone is found guilty or innocent. But for many ordinary Indians, punishment is not in the verdict, but in the process itself. The waiting, the uncertainty, the endless hearings, and the years spent be

Pollution control isn`t charity; it`s strategic economic investment

Every winter, as air pollution shrouds Indian cities from Delhi to Kolkata, public debate converges on the costs: the crores spent on air purifiers, water sprinklers and stubble management, the outlay for waste treatment plants and new green technology. Environmental clean-up is framed as a fiscal burden,

Developed countries must reach Net-Zero far earlier: India at COP30

India has strongly urged developed countries to demonstrate greater climate ambition and honour their commitments. “Developed countries must reach net zero far earlier than current target dates and deliver new, additional, and concessional climate finance at a scale of trillions,

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now





Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter