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S&P Global Ratings has said that about half of the Indian companies that it rates are getting a boost in their core profitability from rupee depreciation. It said ‘much of our rated India corporate portfolio has sizable US-dollar linked revenue and, therefore, is not exposed to rupee depreciation. This encompasses entities in the IT, metals, and chemicals sectors. About half of the firms we rate are getting an EBITDA boost from currency weakening.’

S&P said domestically-driven sectors, such as telecom, are also well placed to withstand the rupee depreciation due to their hedging policies. It said infrastructure entities are most exposed to currency risk among Indian corporates and renewable players in particular have high capex spending and a heavy reliance on dollar debt. It also said still supportive onshore funding environment has also helped Indian companies manage the weaker offshore funding markets. Key onshore benchmark rates have risen about 200 basis points in the year to date, less than that seen in many offshore markets. This has made local markets an attractive alternate source of capital. This will give rated issuers a funding option to repay offshore bonds coming due through 2024.

It further said to tame inflation, the Reserve Bank has hiked key policy rates by 190 basis points since May, taking interest rates to a three-year high of 5.90 per cent. It said Asia-Pacific is in the middle of a set of rapid interest rate hikes coming out of the US. It expects the macro pressures to build on regional foreign-exchange rates, as apparent in widening current account deficits emerging in many countries.