Ind-Ra revises outlook on infra sector to stable for FY19

Rating agency Ind-Ra today said it has revised the outlook on infrastructure sector to stable for the next fiscal on signs of improvement in projects.
The infrastructure sector is showing signs of stability, although pockets of stress still linger, India Ratings and Research (Ind-Ra) said in a statement.
"The agency has revised the outlook on the sector to stable for FY19 from negative in FY18 with visible improvements in toll roads and wind projects. The outlook for telecom has been revised to negative-to-stable from negative. The outlooks for thermal power, oil and gas, power, ports and airports remain unchanged," it said in a statement.

The rating agency said it expects its portfolio ratings to remain largely stable during the course of FY19.
"Toll roads, where pressure points existed during FY17, have exhibited visible improvements in 2018. While the wind sector continues to exhibit under performance, protection from fixed capacity charges and built up of reserves provide stability to the ratings," the statement said.
The telecom sector, however, continues to exhibit significant pressure on its average revenue per user despite industry consolidation, it said adding, Ind-Ra expects FY19 to remain a challenging year for incumbent telecom operators as reflected in Negative Outlook on the ratings.

It said given the stress the infrastructure sector has gone through and is still in the midst of resolving, Ind-Ra believes the consolidation trend would continue over the next 12-18 months.

"Consolidation is by and large completed in the telecom sector; renewables could see some further consolidation during FY19. Some toll roads with stressed engineering, procurement and construction entities have been acquired by stronger foreign players, this could continue in FY19. The resolution of stressed assets under the ambit of National Company Law Tribunal may also drive consolidation in toll roads and thermal power," it added.
The oil and gas sector could see a phase of consolidation within public sector enterprises to establish larger entities, it said.

The agency further said significant competitive intensity has been witnessed in bidding of solar and wind projects.