MOODY’S RAISES OUTLOOK ON INDIA INC

Rating agency Moody’s sees an improvement in the credit profiles of India Inc next year, driven by better sales as it expects the goods and services tax-related disruptions to wane, leading to an overall recovery in economic activities. An improvement in asset valuations, providing a means of deleveraging for some corporates, will also result in improvement in the credit profiles of the companies, the global rating agency said.

Rating agency Moody’s sees an improvement in the credit profiles of India Inc next year, driven by better sales, as it expects GST-related disruptions to wane, leading to an allover recovery in economic activities.

It can be recalled that for the first time in almost 14 years, over the past weekend, Moody’s had upgraded the country’s sovereign ratings to Baa2 with a stable outlook. The last rating revision was in 2004.

“We expect GDP growth of around 7.6 per cent will result in higher sales volumes, which, along with new production capacities and benign commodity prices, will support pre-tax growth of five-six per cent over the next 12-18 months,” Kaustubh Chaubal, a vice-president and senior analyst at Moody’s said on Wednesday in a report on the 2018 outlook for nonfinancial Indian corporates. He said refinancing needs in 2018 will be manageable for most firms, given their improving access to capital markets and their large cash balances.

“Corporates’ cross-border bond maturities will also be manageable for the next three years,” Saranga Ranasinghe, an assistant vice-president and analyst at Moody’s, said. The agency said a further simplification of GST and other structural reforms, or an improvement in commodity prices, resulting in higher operating profit could further improve companies’ credit profiles. That apart an improvement in asset valuations, providing a means of deleveraging for some corporates will also result in improvement in their credit profiles, they said.

Moody’s said a further simplification of GST and other structural reforms could further improve companies’ credit profiles