ICRA holds negative outlook for metal, power sectors
Mumbai: Ratings agency Icra on Tuesday said it holds a negative outlook on sectors like metals and mining, construction, power, and capital goods due to "policy-related constraints".
"The credit outlook for metals and mining, ower, construction and capital goods would remain negative till such time that the policy related constraints are addressed and there is a meaningful pickup in the investment cycle," Icra said in a report.
There have been reports of projects stuck for want of clearances have had an adverse impact on most of the sectors in the previous fiscal.
Besides this, the industry has also blamed other factors like high interest rates, for the fall in overall economic growth, which is officially expected to fall to a decade low of 5 percent for FY13.
The inverse credit ratio, which is the number of downgrades to upgrades, remained elevated at 2.6 percent for FY’13 and ICRA said it does not expect a significant uptick in the credit indicators in the next few quarters.
"The credit indicators are unlikely to change substantially over the next few quarters as ICRA does not expect a significant reduction in the pace of downgrades, although the intensity of downgrades is likely to have peaked in the second half of 2011-12," it said.
The report attributed the jump in downgrades to stretched working capital cycles, demand slowdown, increased commitment to group companies and debt funded capital expenditure.
On the upgrades front, it offered some optimism saying there would be an increase in the pace of upgrades due to a variety of factors.