Moody’s retain stable outlook for Indian firms

Mumbai: Despite concerns regarding the impact of demonetisation on corporate earnings growth, global rating agency Moody’s Investors Service on Wednesday said that its stable outlook for non-financial corporates in India over the next 12-18 months reflects in large part the country’s sustained economic growth.

“Strong GDP growth, capacity additions and stabilizing commodity prices will support EBITDA growth of 6 per cent-12 per cent over the next 12-18 months," said Laura Acres, managing director in Moody's Corporate Finance Group.  

In a joint release with Icra, Moody’s pointed out that the capex cycle for Indian corporates has peaked, as projects are nearing completion, and declining investments will slow the pace of borrowing over the next 12 to 18 months.

Moreover, refinancing needs are manageable for most corporates in 2017, given their better access to the capital markets and large cash balances.

Both agencies also said that the distribution utilities would benefit from lower cost of power purchases, due to improved domestic coal availability, the subdued tariff level of short-term traded power, and flexibility provided by the Centre to generating companies for the optimal utilisation of coal.

Moody’s stable outlook for exploration and production companies reflects higher production volumes, low subsidy burdens and a recovery in oil prices.