Fitch enhances ratings of 13 Indian firms to 'moderate downgrade risk'

These companies are either govt-related entities (GREs) with ratings linked to the sovereign rating or pvt entities whose ratings would be downgraded if India's Country Ceiling was lowered to 'BB+'

Global rating agency Fitch on Monday moved 13 Indian companies from the category of entities carrying 'elevated downgrade risk' — becoming sub-investment grade entities — to those with 'moderate downgrade risk'. This follows the stabilisation of their outlooks and upgrading outlook on India's sovereign rating to 'stable' from 'negative'.

In an update of the Stagflation Downgrade Risk Assessment, Fitch Ratings said it has revised the outlook to 'stable' from 'negative' on 13 Indian companies. These companies are either government-related entities (GREs) with ratings linked to the sovereign rating or private entities whose ratings would be downgraded if India's Country Ceiling was lowered to 'BB+'.

The government entities are Hindustan Petroleum Corporation, Bharat Petroleum Corporation, Indian Oil Corporation, ONGC, GAIL, Powergrid, and Oil India. The private sector entities are Bharti Airtel, Summit Digitel Infrastructure, Adani Transmission, UltraTech Cement, and Reliance Industries.

Reliance Industries (BBB/Stable) and UPL Corp are non-government-linked entities whose ratings can pierce India's Country Ceiling. In the case of RIL, Fitch already rates it one notch higher than India's Country Ceiling (of 'BBB-') at 'BBB'.

Fitch revised the outlook on UPL Corp to 'Negative' on May 30 2022, following a large rise in working capital, specifically a jump in inventories and trade receivables, resulting in higher leverage than expected.

On June 11, 2022, Fitch upgraded India's long-term sovereign debt outlook to stable, citing India's economic recovery since the onset of the pandemic. The agency also said that the ongoing geopolitical issues would weigh less on India than on its peers.