S&P says credit profile of India Inc improving

Tags: Equity
Global ratings agency Standard & Poor's today said an increasing focus by India Inc on lowering debt is likely to improve their credit profiles.

"More companies are improving their high financial leverage and boosting their credit profiles by adopting measures such as sale of equity and assets or using their free operating cash flows to reduce debt," S&P said in a report.

"Focus on lowering debt will likely improve their credit profiles," it added.

The routes adopted by domestic companies include raising equity, selling non-core assets and in some cases divesting businesses, it noted.

S&P credit analyst Mehul Sukkawala said economic gloom and high interest rates have impacted debt-servicing ability and these are the primary factors pushing companies towards this strategy. In some cases, companies are refocusing on reducing debt after years of investing for growth.

Citing examples, it said Tata Power's outlook was recently revised to positive and Bharti Airtel's rating was revised upwards after both companies started focusing on lowering debt.

While Tata Power announced a Rs 2,000-crore rights issue this month and raised $500 million through a stake sale in an Indonesian coal mine last quarter, Bharti raised $1.25 billion through an equity offering last year, S&P added.

"We believe Bharti would continue to take measures such as sale of stakes in subsidiaries (such as Bharti Infratel) or non-core assets (such as tower infrastructure)," it said.

Tata Steel sold part of its holding in group company Titan in 2013 and also put up land in the northwestern suburb of Borivali in Mumbai for sale, S&P said, noting that it has deferred the second phase of a greenfield project in Odisha to focus on generating cash flow for the first phase.

Apart from that, many companies in the infrastructure sector such as GMR Infra with very high leverage are also considering selling assets or stakes in subsidiaries to improve their debt-servicing ability, financial flexibility and liquidity, it said.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • E-auction and eventual privatisation of coal industry are welcome steps

    The government’s decision to privatise the scam-ridden coal industry through a presidential ordinance will eventually end the monopoly of public sec

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Tushar Gandhi

Sustainable model for rural sanitation

Prime minister Narendra Modi has promised to build a toilet ...

Rajgopal Nidamboor

Synchronous balance is vital for one and all

Imagine that you are playing an electronic game, or actually ...

Shona Adhikari

When women to birds become a painter’s muses

This week the focus is on renowned artist Amitabha Banerjee, ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture