India Corporate Credit Quality Getting Stronger, S&P Says

S&P Global Ratings said the credit quality of rated Indian corporates is improving, driven by broad-based earnings growth and increased financial discipline.

The rating agency, whose conclusions are based on an analysis of more than 30 rated Indian issuers, said it has Positive rating outlook on a third of the companies.

"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."

S&P said its key takeaways are:

• Aggregate EBITDA for rated Indian companies will likely grow 10% in 2024, driven by telecoms, airports, commodities, and chemicals.

• Leverage will decline marginally even though average capital expenditure is up 30% 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.

• Financing access and options have generally been deepening.

S&P said the downside risks include a change in financing conditions, or low-probability events such as sector-specific regulatory or government policy changes.

(Send feedback to editor@cornerofficejournal.com)