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Covid-19 disruptions exacerbate credit quality deterioration for India Inc: Moody’s

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Singapore, Sep 11 Morning India: The aggregate earnings before interest, taxes, depreciation and amortisation (EBITDA) for 22 rated Indian non-financial companies will fall by 24 per cent in the current financial year, global rating agency Moody’s said on Friday.

Their credit metrics will weaken as coronavirus-led economic contraction reduces corporate earnings and debt/EBITDA leverage will increase by half a turn to around 4x.

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Credit quality is weakening across most sectors as a slowing economy dampens consumer confidence and business activity. Moody’s Investors Service said India’s real GDP will contract by 11.5 per cent in fiscal 2021.

“Still, we expect fiscal 2022 earnings to recover as economic growth returns. Gradually improving business conditions and activity will support a recovery in credit metrics by March 2022.”

Credit trends are negative for sectors vulnerable to declining consumption and resource price volatility. The economic slowdown will exacerbate challenging conditions for automakers and auto-part suppliers this fiscal year.

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