Creditworthiness of India Cos Under Scanner

The creditworthiness of Indian companies is under scanner, as local ratings firms are assessing the fallout of the Ukraine-Russia conflict and the resultant global economic sanctions on Moscow.

If the geopolitical tension escalates and sustains further, companies could well face rating or outlook revisions, said three ratings companies, ET spoke with.

ICRA, CARE and India Ratings are now busy analyzing sectorwise cause and effect. Defence, tea exports, steel coal, pharmaceuticals, fertilizer, oil and gas are some of those local sectors that will likely face ramifications. Individual rating revisions may be the next step amid evolving scenarios.

“The Ukraine war followed by economic sanctions on Russia will have repercussions on Indian companies,” said K Ravichandran, chief rating at ICRA.

“We are looking into it going sector wise. Initial analysis suggests companies in sectors like oil & gas, fertilisers tea exports, pharmaceuticals and defence would bear the brunt the most,” he said. “We would revisit individual rating grades based on our assessment amid evolving geopolitical tension.”

However, it is not necessary that every such sectors would be impacted negatively.

For example, the indigenous steel sector could well become a beneficiary. The sanctions on Moscow could affect market access for Russian steel-makers, which are heavily reliant on exports, in turn helping Indian steel producers increase footprints in geographies like Europe and the Middle East, according to ICRA.

Russia being a major exporter of oil gas and aluminium, commodity prices are likely to be on a roil impacting local auto and auto ancillaries.

“We are assessing three aspects including direct exposure to Russia and Ukraine as well as indirect impact of rising oil price on specific companies,” said Sachin Gupta, chief rating officer at CARE Rating. “Based on our assessment, we will likely take a call on individual companies, who may face a revision of outlook or any other rating action.”

“This geo-political tension, though simmering for some time, may have unexpected escalations which we are monitoring closely.” He said. S-ET

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