Non-financial corporates in India will benefit from a healthy domestic growth and accommodative monetary policy, Moody's Investors Service and its Indian affiliate ICRA limited on Wednesday said.
“Most non-financial corporates we rate in India will benefit from a healthy 7.5 per cent GDP growth in the country for 2016-17, and a pick-up in manufacturing activity will be broadly supportive of the business growth,”a joint statement by Moody’s Investors Service and ICRA quoted Moody's V-P and Senior Credit Officer Vikas Halan as saying. “But businesses remain vulnerable to the volatile Indian rupee as against the US dollar.” ICRA said it expects corporate performance to be weighed down by over-leveraged large infrastructure groups. Moody's and ICRA also highlighted the difficulties in implementing high-profile policy changes, including the proposed goods and services tax. “A failure to implement reforms could hamper investment levels in India against the backdrop of a weak global growth,” the statement said. According to the statement, Moody's expects upstream oil and gas companies to benefit from a lower fuel subsidy burden although low crude and domestic natural gas prices will continue to hurt profitability. Refining and marketing companies, meanwhile, should benefit from healthy margins as demand growth outpaces expected capacity addition, it said. For the auto sector, Moody's expects retail sales volume to grow 6 per cent in 2016 on the back of sustained growth in passenger vehicles sales and a recovery in commercial vehicle sales.