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Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has maintained a neutral outlook for the overall infrastructure sector for FY23, amid likelihood of a stable operating performance for majority of the projects, long-term visibility of revenue under concession agreements and power purchase agreements, and expected improved cargo and traffic volumes.

The rating agency further noted that internal liquidity, adequacy of operations and maintenance, mitigation of cost overrun and strength of sponsors are critical monitorables. Ind-Ra also underlined headwinds for the sector such as a downward revision in the economic outlook, elevated commodity prices, rising interest rate, land acquisitions delays, construction stage risks and counterparty risks.

According to the report, there is a continued preference for infrastructure investment trusts and pooled financing structures. Refinancing is generally focused on establishing pooled structures to raise funds, elongating the tenor and/or releasing of some sponsor investments. The consequence of rising interest rates is also a key monitorable.