Credit quality of rated India corporates robust, EBITDA to grow 10 pc in 2024
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Riding on broad-based earnings growth and increased financial discipline, credit quality is further improving for rated Indian corporates, a report showed on Monday.
The S&P Global Ratings report said it has positive rating outlooks on a third of the Indian companies it rates.
The report forecasts aggregate EBITDA for rated Indian companies will grow 10 per cent in 2024, driven by telecoms, airports, commodities, and chemicals.
"Our positive outlook on the Indian sovereign contributes to India's high positive outlooks relative to other markets," said S&P Global Ratings credit analyst, Neel Gopalakrishnan.
"But importantly, many of these credits also have improving stand-alone credit profiles,’ Gopalakrishnan added.
The report includes data on the broader outlook for Indian corporate and infrastructure companies in the region.
It also highlights the operational and credit position of 18 of the more highly followed rated firms in the region.
According to the report, leverage will decline marginally even though average capital expenditure is up 30 per cent on pre-pandemic levels.
“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,” the S&P Global Ratings report mentioned.
Financing access and options have generally been deepening in the country.
According to the report, rising cargo volumes support port revenues as operating efficiency supports margins.
In the airport sector, “traffic is rising above pre-COVID levels and higher tariffs improve airport operating cash flow” and decreased capex and shareholder focus should improve airport credit quality with transition plans.
The report noted sustained auto sector operating performance for Indian firms as volumes settled after supply chain issues in 2022 amid normalised growth in auto sales and stable margins.
For steel companies, falling input prices and new capacity additions will increase the steel sector's operating cash flow.
“Oil and gas earnings are largely stable given the price outlook and production is also stable. Telecom capex will moderate after 5G auctions in 2023,” the report mentioned.
