Moody’s interprets strong demand, rising vaccination rate optimized Indian corporates

Moody’s interprets India’s economic growth will rebound strongly, with GDP expanding 9.3 percent in the current fiscal year ending in March 2022, followed by 7.9 percent in fiscal year 2023.

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Moody’s interprets strong demand, rising vaccination rate optimized Indian corporates

On Thursday Moody’s Investors Service said India’s rising vaccination rate, low-interest rates, and higher public spending pilot the positive outlook for corporate sector.

Moody’s interprets India’s economic growth will rebound strongly, with GDP expanding 9.3 percent in the current fiscal year ending in March 2022, followed by 7.9 percent in fiscal year 2023.

Also Read: ‘India should Act More Seriously and Change their Mindset to Fix its Economy’; Moody

Moody’s said credit fundamentals are convenient for India’s companies on unabated economic recovery and earnings of rated companies will rise on strong consumer demand and high commodity prices. India’s rising vaccination rate, stabilizing consumer confidence, low-interest rates, and higher public spending highlights positive credit fundamentals for non-financial companies.

Moody’s Analyst Sweta Patodia said, “India’s steady progress on inoculation against the coronavirus will support a unabated recovery in economic activity. Consumer demand, spending, and manufacturing activity are recovering after the easing of pandemic restrictions. These trends, including high commodity prices, will propel significant growth in rated companies’ EBITDA over the next 12-18 months,”

Growing government spending on infrastructure will help demand for steel and cement. In the meantime, rising consumption, India’s push for domestic manufacturing, and benign funding conditions will support new investments.

However, if new waves of infections were to occur, it could trigger fresh lockdowns and erode consumer sentiment. Such a scenario will dampen economic activity and consumer demand, potentially leading to subdued EBITDA (earnings before interest, taxes, depreciation, and amortization) growth of less than 15-20 percent for Indian companies over the next 12-18 months.  Delays in government spending, energy shortages that lower industrial production or softening commodity prices could curtail companies’ earnings.

It added, “India’s currently low-interest rates will cut funding costs and support new capital investment as demand grows. However, rising inflation may result in a faster-than-expected increase in interest rates, which would weigh on business investment,”

Source: Indian Express, Deccan Herald

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Moody’s interprets strong demand, rising vaccination rate optimized Indian corporates
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Moody’s interprets India’s economic growth will rebound strongly, with GDP expanding 9.3 percent in the current fiscal year ending in March 2022, followed by 7.9 percent in fiscal year 2023.
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THE POLICY TIMES
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