Despite external risks such as rupee fall, rated Indian companies will have limited negative credit implications, a global rating agency said.
Despite external risks such as rupee fall, rated Indian companies will have limited negative credit implications, a global rating agency said. The credit profiles of rated non-financial companies in India (Baa2 stable) will continue to improve through next year, Moody’s Investors Service said.
“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,” Moody’s said.
Saranga Ranasinghe, a Moody’s Assistant Vice President and Analyst, said that revenue for the most Indian companies will grow despite macro headwinds. The rating agency also said that the refinancing risk will be manageable for a majority of the Moody’s-rated Indian companies.
Due to intense competition, capital spending levels of the firms in the telecommunications sector will stay elevated, it also said. “Downstream oil refiners too will see elevated levels of capital spending as they look to increase refining capacity in line with demand growth, Moody’s said.
Moody’s also said that the high shareholder returns of these firms could lead to a rise in debt levels and leverage for oil and IT services industry.
With the steel and auto suppliers sectors, Moody’s says that industry consolidation for companies in these sectors will continue through the next year. While this would lead to improved business profiles, any debt funded acquisitions may lead to elevated leverage levels.