Fitch: Winners and Losers if the Indian Rupee Depreciates Further
OREANDA-NEWS. Fitch Ratings, in a special report published today, highlights those Indian corporates whose financial profiles could strengthen or weaken if the Indian rupee were to depreciate by 15% and 30%.
Fitch specifically highlights nine Indian corporates whose financial profiles would deteriorate and - conversely eight corporates that are likely to benefit.
Hindustan Petroleum Corporation Limited, Indian Oil Corporation Ltd and Adani Ports and Special Economic Zone Limited will benefit the most from the rupee's depreciation as their dollar earnings are sufficient to more than offset the negatives of higher debt and capex in dollar terms. However, Power Grid Corporation of India Ltd, NTPC Limited, Bharti Airtel Limited and Lodha Developers Private Limited tick all three negative boxes of minimal earnings in dollars, dollar-denominated debt and dollar-denominated capex.
The report examines the impact of currency depreciation on both balance sheet and cash flow, and shows the resultant impact on net leverage (adjusted net debt/operating EBITDAR) for each corporate under both 15% and 30% currency depreciation scenarios. We then compare the results against our official negative rating triggers (for those corporates where we have assigned leverage rating triggers).
From a balance-sheet perspective, most Indian corporates will be negatively affected due to their exposure to foreign-currency debt. However, at the EBITDAR level, we do not expect any Indian corporate to be negatively affected by a lower rupee, and in fact anticipate that 14 corporates will experience higher EBITDAR, thanks to US dollar-based revenues and limited cost increases.
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