Global rating agency Moody's recently declared a stable 2018 outlook for non-financial corporations, car-makers, companies in the construction, cement, and textiles sectors, but a negative one on the real estate sector and telecommunication companies. The forecast stems from the expectation of a higher gross domestic product (GDP) growth of 7.6 per cent.
The agency has a stable outlook for exploration and production companies, base metals and information technology (IT) services in the country. It also expects steel consumption to grow in the mid-single digits over the next 12-18 months, but lower than the GDP growth figure, supporting a stable outlook. Consolidation will also rise in the steel sector, according to the company.
Higher GDP growth will lead to more sales volumes, which along with new production capacity and stabilising commodity prices, will back a pre-tax profit growth of 5-6 per cent over the next 12-18 months, Laura Acres, a managing director at Moody's corporate finance group, said in a report.
She said further simplification of the goods and services tax (GST) and other structural reforms or improved commodity prices can result in higher operational profit growth, and provide means for deleveraging for some corporations, according to an Indian news agency.
Intense competition and heavy debts continue to pressure cash flows in telecommunication companies, ultimately driving consolidation activity towards a three player market, said Moody’s. (DS)
Source Fibre2Fashion News Desk – India