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24
November 2016
The credit profiles of Indian corporates
will improve on sustained economic growth and project completions in 2017, said
Moody's Investor Service on Wednesday.
"GDP growth of 7.5 per cent,
capacity additions and stabilising commodity prices will support Ebitda growth
of 6-12 per cent over the next 12-18 months," Laura Acres, Managing
Director of Moody's Corporate Finance Group, said in a statement here. The Total Investment & Insurance
Solutions
Ebitda is earnings before interest, tax,
depreciation and ammortisation.
Noting that "the capex (capital
expenditure) cycle for Indian corporates has peaked as projects near
completion", Acres said declining investments would also slow the pace of
borrowing over the next 12-18 months.
The Total Investment & Insurance Solutions
"Refinancing needs are manageable
for most corporates in 2017, given their better access to the capital markets
and large cash balances," Acres said. The Total Investment & Insurance Solutions
By sector, Moody's stable outlook for
exploration and production firms reflects higher production volumes, low
subsidy burdens and a recovery in oil prices, which will offset lower natural
gas prices and higher royalty payments.
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"In the refining and marketing
segment, capacity additions will partly offset weaker refining margins, while
marketing margins will remain stable," the statement said.
Indian telcos, however, face intense
competition, which will pressure margins, but this should be offset by growth
in data consumption, thus supporting Moody's stable outlook for this sector.
In the real estate sector, Moody's
expects sales volumes to be negatively affected because of demonetisation, but
volumes will start to pick up as interest rates decline.
Moody's stable outlook for the ferrous and
non-ferrous metals and mining segments reflects its expectation for earnings
growth, supported by higher production volumes.
Companies in the auto sector should
benefit from improving customer sentiment following an above average monsoon
season and from expected falling vehicle prices when the Goods and Services Tax
(GST) is introduced in April 2017, replacing a web of taxes.
"In the near term, however, sales
volumes could get negatively affected by demonetisation," added the
statement.The Total Investment &
Insurance Solutions
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