India Ratings and Research (Ind-Ra) Thursday said it has maintained a stable outlook across the infrastructure sector with the exception of coal-based thermal power, which continues with its negative outlook for the remaining part of FY19.
India Ratings and Research (Ind-Ra) Thursday said it has maintained a stable outlook across the infrastructure sector with the exception of coal-based thermal power, which continues with its negative outlook for the remaining part of FY19. “The agency has maintained a stable outlook on the overall transport infrastructure sector including toll roads, annuity roads, hybrid annuity model (HAM) projects and airports. An increase in traffic volumes and inflation-led toll, driven by steady economic growth, could elevate revenue growth by about 9 per cent y-o-y for toll road projects,” it said in a statement.
The outlook on airports reflects limited upward rating movements; although the agency expects continued growth in passenger volumes despite capacity constraints, it said. While HAM projects have enabled revival of private participation, there is some pressure on the financial closure front, as lenders, especially public sector banks, are going slow on financing these projects on account of lack of appetite and lending freeze on many of these lenders, the statement said.
For toll roads, Ind-Ra said it expects revenue to grow at around 9 per cent year-on-year in FY19, supported by toll rate growth of about 4.2 per cent. The agency believe that there will be sufficient flexibility for mature roads to manoeuvre moderate downturns in traffic growth, while speculative-grade assets’ coverages hinge on double-digit traffic growth. Regarding annuity roads, National Highways Authority of India has demonstrated its stable payment track record across the Ind-Ra rated projects over the years, it said.
For coal-based thermal power, non-pit head plants are facing irregular coal supply, leading to a high risk of declaring availability lower-than-required/normative level, Ind-Ra said. Also, competition in short-term market is likely to intensify if there are delays in addressing these issues and absence of long-term power purchase agreements, it added.