Economy

Most Indian sectors will see revenue growth in 2019 despite external risks: Moody's

Updated : November 22, 2018 11:34 AM IST

Industry consolidation for companies in steel and auto sectors will continue through 2019, said the report.

The refinancing risk will be manageable for most Moody's-rated Indian corporates, as per the report.

Most Indian sectors will see revenue growth in 2019 despite external risks: Moody's

The revenue growth of most Indian sectors including steel, mining and auto will continue to improve through 2019 despite the external headwinds, according to a Moody's report titled 'Non-financial corporates — India: 2019 Outlook'.

"Revenue will grow for most Indian industries, despite external risks," said Saranga Ranasinghe, a Moody's analyst, who is also the author of the report.

"The steel, mining and auto sectors in particular will benefit from strong GDP growth, which will in turn support domestic demand," said Kaustubh Chaubal, a Moody's VP and senior credit officer.

Industry consolidation for companies in steel and auto sectors will continue through 2019, said the report, adding that any debt funded acquisitions may lead to elevated leverage levels.

The refinancing risk will be manageable for most Moody's-rated Indian corporates, as per the report.

"As for the rupee's depreciation against the US dollar, such a situation will have limited negative credit implications for rated Indian corporates because most rated Indian-based corporates have protections in place -- including natural hedges, some US dollar revenues and financial hedges," said Ranasinghe.

On the telecommunications sector, the report said, "These companies' capital spending levels, and therefore leverage, will stay high, absent inorganic deleveraging initiatives, due to intense competition."

The capital spending levels of downstream oil refiners like IOCL, HPCL and BPCl will also move higher as these firms attempt to increase refining capacity in line with demand growth, added the report.

According to the report, oil companies which include Oil India and ONGC and the IT services industry's high shareholder returns could cause a jump in their debt levels and leverage.

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