“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.
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.
“Refinancing needs are manageable for most corporates in 2017, given their better access to the capital markets and large cash balances,” Acres said.
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.
“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.