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Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that the entities having reliance on equity infusions through initial public offerings/rights issues or monetisation of assets are likely to be impacted by tightening liquidity conditions and ensuing volatility in asset prices.

As per the report, sudden changes in the macroeconomic contour and volatile conditions in the capital market could inhibit fund raising through these channels, especially for entities with a weak credit profile. This could delay deleveraging or in certain cases expose entities to liquidity risks. On the other hand, as expected, the large corporate portfolio is resilient to any near-term economic shocks.

Further, Soumyajit Niyogi, Director at Ind-Ra said that post pandemic, the buoyant capital market, led by the unprecedented flow of funds globally and domestically, strong economic recovery has enticed business sentiments towards raising funds through asset monetisation or equity dilution. He also added that favourable financial conditions and an attractive outlook on both tangible and equity valuation has made the situation more compelling.