GN Bureau | November 22, 2017
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.
Vishal Dadlani is a versatile musician who composes, sings as well as writes lyrics. He is the co-founder of electronica/indie-rock band Pentagram – the first Indian band to perform at the Glastonbury Music Festival in the UK in 2005. He formed a music producing duo with musician Shekhar Ra
"Acche Vajpayee ka kya karoge (what will you do with a good Vajpayee)?" Atal Bihari Vajpayee once responded to the Opposition`s barb that he was "a good man in the wrong party" in his inimitable style during the trust motion in 1996. The style of delivery was such that the house plunged
We are a nation of stories. Besides our major epics, stories have sprouted around our numerous gods, each constituting a mini-epic. As a people, we read the stories of our gods, we have them read and interpreted, we have them performed in more regional and linguistic variations than we can count. Some of t
NALCO has once again repeated its stupendous performance by registering profit after tax of Rs 687 crore in the first quarter of 2018-19 FY, posting a growth of 167 percent. As compared to the corresponding quarter of the last year, net profit growth has risen by a whopping 433 percent, from
Minister of state for shipping, road transport and highways and chemical and Fertilizers Mansukh L Mandaviya recently said the government is considering the proposal of acquiring shares of Dredging Corporation of India by Visakhapatnam Port Trust, Paradip Port Trust and New Mangalore Port Trust based on th
For production of Light Combat Aircraft (LCA) Tejas, Hindustan Aeronautics Limited has received orders from Indian Air Force for 40 aircraft (20 initial operational clearance (IOC) standard and 20 final operational clearance (FOC) standard). Besides, 40 LCA Tejas, the defence acquisition co