Degrees of resilience

By: |
April 11, 2020 4:30 AM

Rating downgrades outnumbered upgrades in the second half of FY20, with the credit ratio falling to 0.77 times in the second half as compared to 1.21 in the first half of the fiscal.

Already, the economy was teetering, and the crisis is expected to make things worse.Already, the economy was teetering, and the crisis is expected to make things worse.

The impact of coronavirus is devastating for the economy, but a Crisil report highlights that some sectors may do better than others to weather the storm. The report shows that telecom, food supply storage and pharmaceutical may have more resilience and less impact on revenue than say automobile, construction and airlines.

But the larger trend indicates a problematic situation for the market. Already, the economy was teetering, and the crisis is expected to make things worse.

Rating downgrades outnumbered upgrades in the second half of FY20, with the credit ratio falling to 0.77 times in the second half as compared to 1.21 in the first half of the fiscal.

Thankfully, Crisil indicates that 96% of its surveyed industries come in the high resilience and medium resilience category. Restructuring of instrument terms and repayments may provide some reprieve, but it remains to be seen for how long this benefit will be available. Now, all depends on the government.

While states have been extending the lockdown, the outlook will be on how long the crisis lasts. The Centre will have to take some drastic measures to kickstart the economy.

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