India’s sharp rise in infections will disrupt earnings recovery of companies recorded over the past six months, a research report by Moody’s Investors Service has said.<\/p>\n
A prolonged and wider lockdown will have a more severe effect on earnings recovery.<\/p>\n
India’s largely regional and less stringent lockdowns amid the second wave of coronavirus cases so far have had a limited impact on economic activity.<\/p>\n
If infections fail to decline to more manageable levels, however, lockdowns may be prolonged and widen, which will have a more severe effect on companies’ earnings recovery, according to the new report.<\/p>\n
“Movement restrictions and weaker consumer sentiment amid the second virus wave will hit housing and automobile sales as well as transportation-fuel demand temporarily. Still, rising consumer preference for remote working and personal mobility solutions will drive long-term demand for bigger homes and entry-level cars,” said Sweta Patodia, a Moody’s Analyst.<\/p>\n
“Demand for IT and telecommunication services will remain strong despite our expectation of a slowdown in economic activity over the next few months.”<\/p>\n
“Strong global demand could boost exports from Indian steel-makers given relatively weaker demand from automotive and white-goods manufacturing in the current quarter. Exports are therefore an attractive opportunity because domestic steel prices are lower than international prices,” said Kaustubh Chaubal, a Moody’s Vice President and Senior Credit Officer.<\/p>\n
Meanwhile, Tata Steel Ltd. (Ba2 stable) and JSW Steel Limited (Ba2 stable) have diverted part of their capacity in oxygen production toward medical use amid shortages, but their large oxygen-producing plants will limit the impact on steel production.<\/p>\n
At the same time, a slowdown in construction activity will cut cement demand. Cement consumption growth in the fiscal year ending March 2022 may be lower than Moody’s previous forecast of 10%-12% growth.<\/p>\n
Still, high government infrastructure spending and supportive housing demand underpin the sector’s fundamentals and support UltraTech Cement Limited’s (Baa3 negative) earnings, the report said.<\/p>\n
Refinancing risk will be manageable for most issuers given their strong access to funding markets because of their strong balance sheets or status as government owned\/linked companies. However, refinancing could be a problem for companies with weaker balance sheets, Moody’s said.<\/p>\n
The government has not declared loan moratoriums, which supported liquidity in 2020, so far in the current year. This could further pressure liquidity for weaker entities, the report said.<\/p>\n","protected":false},"excerpt":{"rendered":"
India’s sharp rise in infections will disrupt earnings recovery of companies recorded over the past six months, a research report by Moody’s Investors Service has said. A prolonged and wider lockdown will have a more severe effect on earnings recovery. India’s largely regional and less stringent lockdowns amid the second wave of coronavirus cases so […]<\/p>\n","protected":false},"author":1,"featured_media":7070,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[97],"tags":[],"class_list":["post-7069","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/posts\/7069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/comments?post=7069"}],"version-history":[{"count":1,"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/posts\/7069\/revisions"}],"predecessor-version":[{"id":7071,"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/posts\/7069\/revisions\/7071"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/media\/7070"}],"wp:attachment":[{"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/media?parent=7069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/categories?post=7069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demo.testctsl.in\/indiafirstepaper\/wp-json\/wp\/v2\/tags?post=7069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}