Demonetisation to hit real estate sector: Moody's

Sales volumes in the real estate sector would be negatively affected in 2017 because of demonetisation, said global credit rating agency Moody's Investor's Service on Wednesday.

"In the real estate sector, we expect sales volumes to be negatively affected in 2017 because of demonetisation but volumes will start to pick up as interest rates decline," said Moody's in a statement here.

Projecting a stable outlook for non-financial Indian corporates sector-wise, the research firm said credit profiles would improve on sustained economic growth and project completion.

"Ebitda (earnings before interest, tax, depreciation and amortisation) growth from new production capacity, falling capex, and low-refinancing needs will support credit profiles of the corporates," asserted the statement.

The Ebitda's growth will be 6-12 per cent in fiscal 2017-18 and fiscal 2018-19, while refinancing risk will be manageable in fiscal 2017 but will peak thereafter for rated and unrated issuers.

Sector-wise, the outlook for exploration and production firms reflects higher production volumes, low subsidy burdens and a recovery in oil prices, which will offset lower natural gas prices and higher royalty payments.

"In the refining and marketing segment, capacity additions will partly offset weaker refining margins, while marketing margins will remain stable," noted the statement.

In the telecom sector, operators will face intensifying competition and pressure on margins although growth in data consumption will offset the headwinds.

The outlook for the ferrous and non-ferrous metals and mining segments reflects their expectation for earnings growth, supported by higher production volumes.

In the automobile sector, companies will benefit from improving customer sentiment following an above-average monsoon season, expected falling vehicle prices when the Goods and Services Tax comes into force from April 2017.

"In the near term, however, sales volumes in the auto sector could get negatively affected by demonetisation," added the statement.

--IANS

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