Rating agency Standard & Poor's has said that Indian companies are improving their creditworthiness by repaying debt through funds generated from sale of assets and raising equity capital. The rating agency has said that GMR Infrastructure, Bharti Airtel, Tata Power and Tata Steel are among those who have improved their credit profiles through such measures.
"Besides raising equity and selling non-core assets, Indian companies are also divesting stakes in businesses," said Standard & Poor's credit analyst Mehul Sukkawala.
"In our view, the companies' main reasons for improving their financial profiles are the weak economy and high interest rates in India, which have adversely affected cash flows and debt-servicing ability. Another reason is companies are refocusing on reducing debt after years of investing significantly on rapid growth."
Standard & Poor's recently upgraded the outlook on its 'B+' rating on Tata Power Co. Ltd. to positive and raised the rating on Bharti Airtel Ltd. to 'BBB-' after both companies started focusing on lowering debt, in addition to benefiting from favorable regulatory developments.
Tata Power announced a rights issue of Rs 2,000 crore and a stake sale in a coal mine amounting to about $500 million. Bharti Airtel also raised $1.25 billion through equity offering last year.
"We believe the company would continue to take measures such as sale of stakes in subsidiaries (such as Bharti Infratel Ltd.) or non-core assets (such as tower infrastructure)," Sukkawala said.
"Besides raising equity and selling non-core assets, Indian companies are also divesting stakes in businesses," said Standard & Poor's credit analyst Mehul Sukkawala.
"In our view, the companies' main reasons for improving their financial profiles are the weak economy and high interest rates in India, which have adversely affected cash flows and debt-servicing ability. Another reason is companies are refocusing on reducing debt after years of investing significantly on rapid growth."
Standard & Poor's recently upgraded the outlook on its 'B+' rating on Tata Power Co. Ltd. to positive and raised the rating on Bharti Airtel Ltd. to 'BBB-' after both companies started focusing on lowering debt, in addition to benefiting from favorable regulatory developments.
Tata Power announced a rights issue of Rs 2,000 crore and a stake sale in a coal mine amounting to about $500 million. Bharti Airtel also raised $1.25 billion through equity offering last year.
"We believe the company would continue to take measures such as sale of stakes in subsidiaries (such as Bharti Infratel Ltd.) or non-core assets (such as tower infrastructure)," Sukkawala said.
Source: News in Hindi
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