Global rating agency Standard and Poor's (S&P) in its latest report on Indian companies has said that to overcome uncertainties from global geopolitical changes and domestic policy-making, strong domestic demand and cost competitiveness in exports will help Indian companies. It also said that faster economic growth as well as reforms will make India a good macroeconomic story and this coupled with the stable credit profile of companies, bodes well for foreign currency bonds by Indian issuers.
In its 'India Corporate Outlook 2017', S&P said that healthy economic growth and falling interest rates should also benefit companies in the country. It added that while Indian companies are better placed than their global peers, they believe their ability to manage capital expenditure and quickly adjust to ongoing structural reforms in the country is crucial. However, it said that the key risk to revenue growth for the current fiscal is a short-term fall in demand due to the demonetisation-related cash crunch and the proposed introduction of a goods and services tax may pose a similar risk for fiscal 2018.
The report said that outlook for most of the 26 Indian companies S&P rates is stable over the next 12-24 months, but global companies are constrained by slow growth in the developed economy and global trade, rising protectionist measures and increasing interest rates. S&P said that it expects a revival in demand and completion of projects to support strong revenue growth and deleveraging for domestically-focused Indian companies (such as those in the utilities, infrastructure and telecom sectors) in the next 12-24 months. It also expects potential challenges in export-focused sectors such as pharmaceuticals and information technology (IT) services from increasing regulations, protectionism, and competition globally.
