Moody's Ratings in its latest report has said that elevated global energy prices triggered by the ongoing West Asia conflict, are expected to weigh on the near-term credit conditions of Indian corporates, despite strong balance sheets and favourable long-term growth prospects. Stating that Indian corporates are currently well-positioned to absorb external shocks, supported by deleveraging, healthy liquidity and supportive policy frameworks, it said persistently high energy prices and structural shifts in key service industries could test credit strength over the coming quarters.
According to the report, the ongoing tensions in the West Asia will weigh on near-term earnings and cash flows for energy-intensive and fuel-dependent sectors. It said India's heavy reliance on imported crude oil, liquefied natural gas and certain petroleum products exposes corporates to higher input costs, currency volatility and supply chain disruptions.
It further said state-owned oil marketing companies and downstream fuel retailers face acute margin pressure as elevated costs are only partially passed through to consumers, while fuel-intensive sectors such as cement, chemicals, fertilisers and aviation are seeing rising cost burdens.
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