India Ratings and Research (Ind-Ra) has published the February 2021 edition of its research and ratings compendium. Following are some of the key topics included in this edition:
1. A summary of the rating actions taken during February 2021
2. A profile on status & vulnerability of Indian states
3. An analysis of lower-than-expected COVID-19 stress on banks
4. The impact of budget 2021 on fertiliser subsidy backlog, steel demand and retail jewelers
5. Continued recovery of telecom sector
6. Outlook revision of energy & transport infrastructure to stable for FY22
Rating action highlights: Corporate rating upgrades in February 2021 continued to outpace rating downgrades for the second month in row. Ind-Ra had upgraded 19 ratings (January 2021: 16) compared to 13 downgrades (January 2021: nine) in the month. The rating upgrades were supported by an improvement in the operational profile with a business recovery as well as stronger profitability and a likely sustained improvement in the leverage over the medium term. The improved performance outlook was supported by a significantly better-than-expected recovery seen in FY21 GDP along with buoyant FY22 GDP, leading to visibility in the financial projections of issuers. In its Press Release dated 10 February 2021, Ind-Ra expects India’s FY22 GDP to grow by 10.4% vs negative 7.8% in FY21.
The Industrial bucket saw the highest proportion of overall rating actions. 24% of the issuers from this bucket saw an upward trend in their ratings while 26% saw negative rating actions. Issuers belonging to auto & ancillaries, building materials and construction, heavy electric equipment and logistics faced positive rating actions. This was mainly supported by an improvement in the business outlook in general. Growth in business profile with an entry in new products or a higher demand leading to improved earnings or faster-than-expected balance sheet deleveraging were the major driving factors.
The agency had taken positive rating actions on issuers belonging to textiles and real estate sector in the Discretionary bucket, to reflect a stronger-than-expected recovery in demand for textiles. For real estate, the positive actions were in the high rating category, concluding a possible demand shift to more established players and leading to increased visibility on occupancies and resilient operational performance despite a challenging environment while maintaining prudent financial policies. Negative rating actions were driven by individual issuer-related pressures on revenues, weakening financial metrics and liquidity and not due to any sector-related concerns.
The Essentials bucket continued to see a high number of positive rating actions, driven by the healthcare and education sectors. The positive rating actions were led by a healthy operational performance and sound liquidity. No negative rating actions were seen in this bucket.
Issuers belonging to the food & beverage, healthcare facilities and power sector led to positive rating actions in the Non-discretionary bucket. This was led by enhanced product diversification supporting scale of operations or financial performance being significantly better than expectations and having shown resilience during the pandemic. The number of negative rating actions was minimal.
The agency has been continuously monitoring the on-ground situation among its rated universe and the sectors at large, and transparently communicating to the market its views, forecasts and its assumptions and the rating sensitivities through sector-specific webinars and research reports.
compendium is freely available for download from our website
Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings.
Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.