The rating revision also takes into account the funding risks arising from group’s considerable equity and debt servicing commitments.
It also cut rating for term loans and non-fund facility to “BBB” from “BBB+”. The outlook on long-term rating has been revised to negative from stable.
Icra in a statement said GMR has low cash balances. The cash generation from operating assets and assets which will be commissioned in near term is expected to be inadequate.
The company is expected to largely depend on debt to meet its equity and debt-servicing commitments. Such dependence on leveraging would result in heightened financial and refinancing risks, Icra added.
The group has capex plans aggregating Rs 32,000 crore over the next two-three years, necessitating incremental equity investments of approximately Rs 3,600 crore.
The group also has substantial debt servicing commitments to the extent of Rs 5,516 crore over the next three years (debt raised to fund equity commitments and which is therefore not backed by project cash flows).
While GMR Infra has sufficient cash/liquid investments (Rs 2,700 crore) to meet immediate equity/debt servicing requirements, substantial additional funds would need to be tied up.
The group has divestment plans across several sectors. But, putting such plans into action is expected to be challenging given the scale of funds planned to be so raised and the continued weak market conditions.