Indian firms have become more credit-worthy in the current fiscal on better profitability and funding access, rating agency Crisil said on Thursday.
"We will raise Rs 300 crore via bonds of two-, three- and five-year tenures. This will be our maiden bond issuance and is part of our effort to widen funding sources," says Vimal Bhandari, executive vice-chairman and chief executive officer (CEO), Arka Fincap. The firm, a subsidiary of Kirloskar Oil, is only five years old and small (assets of around Rs 5,000 crore with an "AA" rating), but the response to this float will be closely watched: It would be the first by a non-banking finance company (NBFC) after Mint Road upped the risk weights on bank exposures to them by 25 percentage points. The move by the Reserve Bank of India (RBI) has caught NBFCs off guard even though the issue had been flagged by Governor Shaktikanta Das with their corner-room occupants (and that of banks) in July and August 2023 - on consumer credit and the dependency on bank borrowings.
RBI's draft guidelines on computation of base rate, if implemented in its current form, will significantly impact the profitability of banks.
The liquidity will move into deficit after advance tax payments and GST outflows. It will rebound in October because of government spending.
Rating agency Crisil has revised downwards the Indian GDP growth forecast for FY09 to 8.1 per cent, from the earlier 8.5 per cent, in view of the high inflationary conditions, interest rate and global growth outlook.However, despite the growth deceleration, Crisil expects inflation to stabilise at an average 5.5 per cent in 2008-09 in a normal monsoon scenario, the agency said.
International rating agency Standard & Poor's has become the majority shareholder of Indian credit rating agency Crisil Ltd with 58.5 per cent stake, after it acquired 49.07 per cent shares during its recent open offer.
It could add to pressure on inflation, especially food inflation, which was already high, it said.
The agency welcomed the Rs 1.70-lakh crore package announced by Finance Minister Nirmala Sitharaman earlier in the day but said more measures like loan forbearances for small businesses and households are necessary.
Global rating agency Standard & Poor's on Tuesday announced that it intends to become a majority shareholder in CRISIL Ltd by making a voluntary conditional open offer of Rs 680 per share.
"The examination will cover several aspects, including standalone profiles of the Indian subsidiaries, our assessment of the strength and quality of parent support, and translation of global ratings to the Crisil scale," Crisil Ratings Senior Director Raman Uberoi said.
In line with other rating agencies and economic organisations, Crisil on Friday forecasted 7.1 per cent economic growth in the wake of an excellent monsoon, but warned that the fiscal deficit would overshoot the target besides lower export growth.
Rating agency Crisil Ltd has acquired EconoMatters Ltd, a London-based energy and gas advisory firm, and its subsidiary companies for over Rs 15 crore.
The fast upward movement in the capital markets, which saw the Sensex touching 3-1/2 year high last week, was due for correction in the short term, credit rating agency Crisil said on Tuesday.
Amid low growth elsewhere, gross value added (GVA) growth in agriculture and allied activities recovered during the second quarter of the current financial year (Q2FY25) to 3.5 per cent year-on-year (Y-o-Y) due to strong monsoon. Experts feel that the rains have laid the foundation of an even better GVA performance in subsequent quarters. GVA growth in the first quarter of FY25 was 2.0 per cent.
The agency had in May projected an economic growth between 7.7 and 8 per cent for this fiscal and Monday's revision comes within a week of rival Fitch Ratings, and Citigroup revising the same to 7.5 per cent from 7.7.
Rating agency Crisil said corporates, especially those in the auto, aviation, consumer durables and oil sectors, will be "severely impacted" by rupee depreciation due to large overseas debt and limited hedging.
The domestic currency will appreciate to touch the 50 level by next March provided certain measures are taken by the government urgently, the rating agency's research wing said in a note.
Mining conglomerate Vedanta Limited has received approvals from the majority of its creditors for a proposed demerger of businesses, marking an important step in the company's plan to split into six independent listed companies. "I am happy to let all of you know that we have received the 52 per cent plus the additional percentage, which is required for us to reach 75 per cent. "We have crossed that threshold as well. Most of the lenders have approved it," a senior Vedanta executive said in a recent bondholder conference call.
Amid the political blame game over Bengal's potato ban, which led to shortages in Jharkhand and Odisha, Uttar Pradesh farmers are the unlikely winners.
The profitability of public sector banks would decline by over 40 per cent by 2005-06 due to re-pricing of the government securities portfolio, credit rating agency Crisil said.
India's leading steel companies hope the Modi 3.0 Budget will continue the massive capital expenditure currently underway, focusing on infrastructure development, manufacturing, and fair trade. The infrastructure segment is the largest steel user, and the government's focus has fuelled steel consumption even as international markets have underperformed. According to provisional statistics, steel consumption grew 13.6 per cent in FY24, reaching 136 million tonnes (mt), according to a CRISIL report.
Rating agency Crisil on Friday said growth rates witnessed in the current fiscal in several sectors are expected to continue for 3-5 years, even as it predicted rising wages in the information technology sector by 2007-08.
The rating agency expects that key fiscal indicators of state governments -- revenue deficit and gross fiscal deficit - may deteriorate from 2009 though the impact will begin to be felt in the current fiscal. It further said that the adverse effect of lower revenue growth will be aggravated due to higher development and non-development expenditures.
The Crisil study covered 600 companies excluding financial services and oil companies, representing 71 per cent of the overall market capitalisation of India Inc.
Following are comments from economists at leading financial institutions, banks and rating agencies on the interim Budget:
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The agency also warned the government of overshooting the fiscal deficit target at 4.8 per cent due to poor revenue growth and pegged it at 5.2 per cent this fiscal.
Credit rating agency Crisil has announced that it has reached a preliminary understanding with Equifax Inc of the US, and Tata Capital Ltd to set up a credit information company, which provides credit histories and checks on retail borrowers.
In a new report, the agency said the gross non-performing assets for the sector will rise to around 4 per cent on an asset size of over Rs 5,50,000 crore by March 2009, as against 2.7 per cent at the end of March 31, 2007. The rise in bad debt will translate into more losses for lenders.
Crisil said the next fiscal could be a year of new leadership and old challenges.
The government on Tuesday proposed reducing the long-term capital gains tax on immovable properties to 12.5 per cent from 20 per cent, but removed the indexation benefits to adjust for inflation, a move experts termed as "negative" for sellers.
Only borrow an amount that can be repaid comfortably. The ratio of total EMI to take-home salary should not exceed 40 per cent.
Preparing a 'vegetarian thali' got dearer by 34 per cent in July as compared to June because of the soaring tomato prices, an arm of a rating agency said in a report on Monday. A non-vegetarian thali was relatively less impacted and the price of preparing one went up by only 13 per cent, Crisil's 'Roti Rice Rate' report for August said. The inflation in the thalis is largely driven by the 233 per cent jump in tomato prices to Rs 110 per kilogramme in July from Rs 33 in June, the report said.
Credit rating agency Crisil on Wednesday said depreciation in the rupee will shave off up to Rs 4,000 crore (Rs 40 billion) from the profits of Nifty companies in the December quarter.
Analysts are divided on their retail price inflation forecast, with some saying the first quarter numbers will overshoot the RBI target by as much as 60 bps while others are softer in their estimate. Consumer price inflation retreated from its 15-month peak of 7.4 per cent in July to 6.8 per cent in August, much lower than the market expectations, despite vegetable prices remaining elevated at 26.1 per cent. Food inflation eased to 9.9 per cent from 11.5 per cent, led by some cooling of inflation in vegetables, cereals, pulses and milk.
Corporate India's credit quality showed a sharp improvement in the second half of FY22, but high input prices and withdrawal of pandemic-related relief measures can pose pressures in the new year, rating agencies said on Friday. Crisil Ratings, which rates a large number of financial sector entities, reported an improvement in the credit ratio -- the number of upgrades to downgrade -- to 5.04 times in the second half of this financial year, from the 2.96 per cent in the first half of the fiscal. It attributed the improvement to a sustained rebound in demand, which lifted revenues of most sectors to pre-pandemic levels and proactive relief measures by the government that cushioned the pandemic blow.
Crisil said a complete phase out of CST is necessary.
Led by Trent, which hit its lifetime-high recently, apparel retailers have gained between 10 per cent and 36 per cent over the past three weeks. Given the network of physical stores, these stocks shall be major beneficiaries of the unlock theme, with most states doing away with Covid restrictions. Amid improving footfall, analysts expect the sector to post double-digit growth in FY23.
