Page 15 - Icra

States borrowing cost rises 4 basis points to 7.4%, says Icra Ratings

In the last weekly auction of the June quarter, 12 states raised Rs 22,500 crore in debt on Tuesday. The amount is 5 per cent lower than the indicated Rs 23,600 crore for the week at an average weighted cut-off rate of 7.41 per cent, up 4 basis points from the last auction. The rise in the average pricing is primarily due to an increase in the weighted average tenor to 16 years from 14 years, Icra Ratings said in a note. The spread between the 10-year state security and the 10-year Government of India security inched up to 34 bps. As a result, the weighted average cost rose 4 bps to 7.41 per cent, the rating agency said.

Non-ferrous industry earnings to remain under pressure in FY24: Icra

Earnings of domestic non-ferrous metal industry players remain under pressure in the ongoing fiscal amid weak demand, according to Icra. Due to global macroeconomic uncertainties and weaker-than-earlier expected recovery in Chinese demand, international prices of the three non-ferrous metals viz. aluminium, copper and zinc fell by 11 per cent, 8 per cent and 30 per cent, respectively, in the last six months, the rating agency said in a report. "The earnings of the industry would remain under pressure in FY2024, after a lacklustre performance in the last fiscal. Significant metal price corrections remain the key headwind affecting the margins, with no immediate relief in sight," it said. The moderation in earnings, combined with the committed expansion plans of the players, is expected to increase the industry's leverage in FY2024. However, the debt protection metrics remain adequate in the base case scenario and, therefore, ICRA maintains a stable outlook on the sector. Global ...

CBAM framework to impact India's 15-40% of steel export to Europe: Icra

The Carbon Border Adjustment Mechanism (CBAM) framework will impact India's 15-40 per cent of steel exports to Europe, Icra said on Thursday. The impact will be seen from the calendar year 2026 to 2034, the rating agency said in a report. The European Union (EU) is introducing the CBAM from October 1 this year. Icra said the EU is the second largest steel-consuming block globally. It recently signed the mechanism laying the framework for the imposition of taxes on embedded carbon imports from six sectors, which includes steel, aluminium, cement, hydrogen, electricity, and fertiliser. "...CBAM compliance requirements could pull down the profits of Indian steel exports to the EU by USD 60-165/MT between CY 2026 and CY2034. CBAM to impact between 15-40 per cent of India's annual steel exports which are made to Europe. Failure to reduce the carbon footprint may result in lower profits in EU markets," it said. According to Icra, India exports up to 3-5 million tonnes of finished steel

Bank NIMs to compress 10-120 bps in FY24: Rating agencies CRISIL and ICRA

With a healthy loan profile, credit costs fall further from 0.7% in FY23

Bond auction: 11 states borrow Rs 22,500 crore; Maharashtra tops the list

The four state governments issued 10-year bonds to raise Rs 3,000 crore. Tamil Nadu raised Rs 2,000 crore, Haryana Rs 750 crore, Nagaland Rs 150 crore, and Goa Rs 100 crore

India's domestic air passenger traffic up by 2.3% in May, Icra study shows

The Indian airline sector is having a smooth flight in terms of increasing passenger traffic this fiscal as per ICRA study

Bond issuances by banks to fall below Rs 90,000 cr in FY24: Report

Issuances hit all-time high of Rs 1.1 trn previous financial year but liquidity conditions easing now

India Inc's revenue grew 11.4% in Q4FY23, but geopolitical tensions remain

According to Icra, sequential recovery in the overall performance of India Inc is contingent upon how well the entities are able to cope with the headwinds going forward

IT sector growth to slow down further in FY24, hiring to be low: Icra

Indian IT companies revenue growth will slow down further to mid-single digits amid intensifying headwinds for the nearly USD 250 billion dollar sector, domestic rating agency Icra said on Wednesday. The continuing uncertainties are set to take their toll on hiring, and companies are expected to keep employee addition at "low levels" in the near term, the rating agency said, adding that the net addition is negative in the last two-quarters of FY23. As per industry lobby grouping Nasscom's report published in March, the sector's growth slowed down to 8.4 per cent in FY23 from over 15 per cent in the previous fiscal. "Despite a strong order book and deal pipelines of Indian IT services companies, Icra expects the revenue growth to remain subdued in mid-single digits in USD terms in FY2024," the agency said. It has maintained its stable outlook for companies in the sector, which is generally known to have the best quality on leverage positions. The agency said the growth momentum ...

Thermal plants capacity utilisation may to improve to 65.1% in FY24: Icra

India's total plant load factor (PLF) or capacity utilisation of thermal plants is expected to rise to 65.1 per cent this fiscal over 64.2 per cent in the preceding financial year (FY) 2022-23, according to Icra. In its latest report, Icra projected the all-India thermal PLF level to improve to 65.1 per cent in FY2024 led by the growth in electricity demand and limited thermal capacity addition. Its outlook for the thermal power segment is also stable, supported by the healthy improvement in the thermal PLF, coupled with the reduction in dues from state distribution utilities (discoms), following the implementation of the late payment surcharge (LPS) scheme, the ratings agency said on Wednesday. "The rating agency projects the full-year demand growth for FY2024 at a modest 5.0-5.5%, slightly lower than its expectation for the GDP growth for this fiscal (6 per cent), with unseasonal rains having dampened demand over the past two-and-a-half months," it said. However, the demand is ..

Services sector to drive GDP growth to 4.9% in Q4 FY23, says Icra

Domestic rating agency Icra expects GDP growth in January-March period of 2022-23 at 4.9 per cent, a modest step-up from the 4.4 per cent recorded in preceding quarters, driven by the services sector. The National Statistical Organisation (NSO) is scheduled to release the provisional estimate for the GDP growth for the fourth quarter as well for the fiscal 2022-23 on May 31. Icra estimates the services gross value added (GVA) year-on-year growth to have risen mildly to about 6.4 per cent in Q4 FY23 from 6.2 per cent in Q3 FY23. The YoY performance of nine of the 14 high frequency indicators of the services sector improved in Q4 FY23 relative to Q3 FY23, partly reflecting the robust demand for the contact-intensive segment, as well as the low base of Covid 3.0 for some sectors such as aviation, it said in a release. Aditi Nayar, Chief Economist, Head-Research and Outreach, Icra, said that economic activity in fourth quarter of FY23 remained uneven, with domestic demand for services

Stocks to Watch today, May 25: Nykaa, LIC, Adani Group, Hindalco, Nalco

Stocks to watch on May 25, 2023: AIA Engineering, eClerx, GSFC, Voda Idea, IEX, IFCI, Page Inds, SAIL, Strides Pharma, and Zee among prominent companies scheduled to announce Q4 results on Thursday.

Icra Q4 net profit up 14.5% YoY to Rs 38.6 cr; revenue rises 16.4%

Consolidated revenue from operations increased by 17.6 per cent YoY to Rs 403.2 crore in FY23

Insurance industry's direct premium to cross Rs 3 trn by FY25: Icra

The insurance industry is expected to net gross direct premium income (GDPI) of about Rs 3 lakh crore by FY25 as against Rs 2.4 lakh crore at the end of March 2023, a report said. Private insurers' combined ratio is likely to improve and Return of Equity (RoE) is expected at 11.2-12.8 per cent in FY2024 and 12.5-13.9 per cent in FY2025, ICRA said in a report. Most PSU insurers are expected to witness high combined ratio resulting in net losses, though it will be lower compared to last few years, it said. Moreover, it said, the capital requirement of three PSU general insurers (excluding New India) is estimated at a sizeable Rs 172-175 billion to meet solvency of 1.50 times as of March 2024, assuming 100 per cent forbearance from the regulator. The industry's GDPI grew a sharp 17.2 per cent year-on-year (YoY) in 2022-23 to Rs 2.4 lakh crore with the resumption of economic activity after the waning of Covid-19 infections. In absolute terms, the report said, the incremental growth in

Healthy traffic, pricing to cut down airlines' losses of Rs 50-70 bn: Icra

Indian airline industry is likely to cut down its losses to about Rs 50-70 bn, owing to healthy passenger traffic and ability to shore up their yields, ICRA said in a sectoral report

Domestic commercial vehicle industry expects to grow by 7-10% in FY24: Icra

The domestic commercial vehicle industry volumes are expected to grow by 7-10 per cent in FY2024, supported by replacement demand, pick-up in mining, infrastructure construction activities and overall healthy fleet utilisation levels, rating firm Icra said on Thursday. This is despite the 5 per cent year-on-year and 41 per cent sequential contraction in volumes in April 2023, it noted. The growth in FY2024 would follow a year of healthy demand in FY2023, wherein the industry volumes expanded by more than 33 per cent, supported by a favourable base, as well as a healthy pick-up in macroeconomic activity, Icra said. The scrappage policy, which was announced in March 2021, has been implemented from April 1, 2023, and is likely to contribute to the growth of new commercial vehicle sales, it added. "The major impact of the scrappage policy is expected in the CV (Commercial Vehicle) segment, especially passenger carriers, as the usage of other vehicles such as two-wheelers, passenger ...

ICRA downgrades ratings of Shapoorji Pallonji to BBB+, places it on watch

ICRA has downgraded the ratings of Shapoorji Pallonji and Company to BBB+ from A- and placed it on rating watch with developing implications.

Icra downgrades Shapoorji Pallonji Group flagship's ratings to BBB+

The flagship company of Shapoorji Pallonji Group, the single-largest shareholder in Tata Sons, had its debt downgraded on Thursday by a domestic rating agency. The Rs 19,600-crore debt across multiple instruments of Shapoorji Pallonji and Company Private Limited (SPCPL) has been downgraded to BBB+/A2 from A- (with a stable outlook)/ A2+, and placed on rating watch with developing implication, according to a statement. The delay in securing the requisite working capital limits, which has impacted the engineering, procurement and construction (EPC) operations in FY23, is resulting in modest profitability and muted debt coverage metrics, Icra said. Its line of credit was put to restricted use as a part of the One Time Restructuring (OTR) plan in March 2022, which constrained order execution in FY23, it said, adding timely sanction of adequate working capital limits remains critical to support the growth in core operations in the medium term. The 'Watch with Developing Implications' ..

Icra downgrades SPCPL's rating to BBB+ on delay in securing working capital

The delay has impacted the engineering, procurement, and construction (EPC) operations in FY23, resulting in modest profitability and muted debt coverage metrics compared with earlier estimates

Icra cuts telecom tower industry outlook to negative from stable

Fearing payment delays from key telcos to continue in FY24, domestic rating agency Icra on Tuesday cut its outlook on the telecom towers industry to 'negative' from 'stable'. In a note, the agency said delays in payments by some of the key customers have elongated the receivables cycle for the telecom tower companies to more than 80 days in FY23. The tower industry's dependence on weaker telcos in terms of tenancies remains high at around 34 per cent. Thus, till the time there are liquidity pressures on such customers, the tower industry's health is likely to remain affected, it said. "The elongation in receivables is likely to result in tower companies making sizeable provisions to the tune of Rs 10,000 crore in FY23, thereby denting their profitability," its sector head for corporate ratings Ankit Jain said. The agency expects the provisions to continue going forward, although the quantum is likely to moderate from the FY23 levels, Jain said, adding that increased reliance on ...