According to a report released on Monday, credit quality for rated Indian corporates is steadily getting better as a result of enhanced financial discipline and broadly based profits growth.
According to the S&P Global Ratings report, a third of the Indian companies it ratings have favorable rating outlooks.
According to the research, the telecom, aviation, commodities, and chemical industries will be the main drivers of the 10% growth in aggregate EBITDA for rated Indian companies in 2024.
Neel Gopalakrishnan, a credit analyst at S&P Global Ratings, stated, “Our positive outlook on the Indian sovereign contributes to India’s high positive outlooks relative to other markets.”
Importantly, though, Gopalakrishnan continued, “many of these credits also have improving stand-alone credit profiles.”
Data on the prognosis for Indian corporate and infrastructural businesses in the region is also included in the research.
Additionally, it provides an overview of the credit and operational standing of eighteen of the region’s most well regarded companies.
The paper states that even if average capital expenditure is up 30% from pre-pandemic levels, leverage will only slightly decrease.
In the S&P Global Ratings report, it was stated that “companies have greater headroom over downside rating triggers, which will cushion earnings disappointments or increased capital expenditure or mergers and acquisitions; exceptions include companies in sectors such as renewables.”
Generally speaking, the nation’s financing alternatives and accessibility have expanded.
As operating efficiency supports margins, increasing cargo volumes enhance port revenues, claims the research.
“Traffic is rising above pre-COVID levels and higher tariffs improve airport operating cash flow,” according to the airport industry. Transition plans involving less capital expenditure and shareholder focus should also help to improve the credit quality of airports.
The survey observed solid operating performance for Indian companies in the auto sector in 2022, with normalized increase in auto sales and stable margins, following supply chain difficulties.
Falling input costs and new capacity expansions will boost operating cash flow for steel companies in the steel sector.
Given the price outlook, oil and gas earnings are generally stable, and output is also steady. The report stated that telecom capital expenditure will decrease following the 2023 5G auctions.
