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Moody’s on the impact of the Covid-led disruption on Indian infrastructure companies.

A container ship is docked at the Port of India’s Adani Special Economic Zone (APSEZ) in Mundra. India

Sam Phanthakee | AFP | Getty Images

India’s second wave of coronavirus outbreak will affect the country’s infrastructure companies to varying degrees, according to Moody̵

7;s Investors Service.

Power companies and ports It is expected to be able to withstand the impact of the pandemic disruption better compared to airports and expressway operators. The rating agency said in its latest report.

The South Asian country experienced a serious second wave as reports of coronavirus cases rose sharply between February and early May. It overwhelms hospitals and medical necessities such as oxygen and medicine are in short supply.

As the federal government re-enforces a nationwide lockdown as it did last year. Government officials have added local restrictions to curb the spread of the virus. This includes regional city closures.

Abhishek Tyagi, Moody’s vice president and senior credit officer, said in a statement: “Lockdowns along with changes in public behavior are controlling economic activity and mobility. This will have a wide range of impacts on infrastructure companies.”

India’s regional lockdown has reduced demand for electricity. including reduced traffic volumes for transport companies But labor readiness has not been significantly affected until now.

Here’s what Moody’s had to say about the country’s infrastructure company:


The rated energy company’s business model allows them to manage current shrinking demand and withstand moderate expansion of the cash conversion cycle. This is the number of days it takes the company to convert its investments into cash flows from sales. That is because Indian energy companies are dependent on state-owned distribution companies that are likely to be under financial strain due to declining demand.

Where demand remains low for a long time and cash pressure follows, Moody’s said energy companies Have access to good liquidity and support

Airport and expressway operators

Moody’s expects an airport recovery in India. some of which are in the process of expanding debt repayment plans will be pushed further Due to the second wave and subsequent regional lockdowns International travel is expected to take longer to recover due to border closures.

Although domestic and international traffic increased between October this year and March 2022, the second half of India’s current fiscal year, Moody’s said the disruption caused by the second wave would “It will likely result in lower data traffic and revenue in fiscal 2022 and possibly fiscal 2023 compared to our previous forecasts.”

The rating agency has downgraded this month’s rating of Delhi International Airport to B1, deemed speculative and high on credit risk. It said the airport would likely need more debt to complete the expansion as its operating cash flow fell.

India’s rise in Covid vaccination rates could be the main driver for the airport’s recovery, according to Moody’s.

Prolonged movement restrictions or new lockdowns will continue to negatively affect toll operators and put pressure on their credit quality. The rating agency said


India’s rated port performed well last fiscal year. Although the economy contracted due to the pandemic And can improve market share, according to Moody’s.

Most port operators remain unaffected by regional lockdowns as “traffic movements across the country remain normal. And both ports still have enough buffer in their finances to accommodate the temporary disruption,” Moody’s said.

The path to economic recovery

Daily reports of Covid-19 cases in India have been declining since peaking in early May. As the situation improves, many states are easing restrictions on reopening their economies. But experts have warned of an inevitable third wave of infection.

Moody’s points out that with vaccination rates still relatively low, It thus opens up the risk of a subsequent wave of infection that may drive states to Perform additional lockdowns.

“Government’s ability to limit the spread of the virus and significantly increase vaccine drives will directly affect economic recovery,” the rating agency said.

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