After CHANGING the outlook of India’s sovereign ratings to negative from stable and affirming the Baa2 foreign-currency and local-currency long-term issuer ratings on Friday, Moody’s Investors Service downgraded the outlook for 21 companies. These companies belong to the infrastructure, oil and gas, and information technology sectors.
Rating outlook was cut to negative from stable for Infosys, TCS, State Bank of India and HDFC Bank, along with other financial institutions, corporates and sovereign-linked infrastructure companies.
Moody’s revised the outlook for ratings of eight companies — Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Indian Oil Corporation, Oil and Natural Gas Corporation, Oil India, Petronet LNG, Infosys and Tata Consultancy Services — to negative from stable.
Shares of all the companies that witnessed a downgrade in outlook and are listed on the stock exchanges saw share prices fall by up to 5.2 per cent. While the shares of HPCL fell 5.2 per cent, ONGC and TCS saw their shares fall by 2.6 per cent and 2.5 per cent, respectively. GAIL and Petronet LNG saw their share prices fall 3.9 per cent and 5 per cent, respectively.
Moody’s revised the outlook of six financial institutions to negative from stable: EXIM India, HDFC Bank, Hero FinCorp, HUDCO, Indian Railway Finance Corporation, and SBI, while maintaining stable outlook for Bank of India, Canara Bank, Oriental Bank of Commerce, Syndicate Bank and Union Bank of India.
Among the infrastructure companies, the ratings outlook was revised down for NTPC, NHPC, National Highways Authority of India, GAIL, and Power Grid Corporation to negative from stable.
Moody’s revised down ratings outlook to negative from stable for Adani Green Energy Restricted Group, comprising Wardha Solar (Maharashtra) Pvt Ltd, Kodangal Solar Park Pvt Ltd, Adani Renewable Energy Ltd, and Adani Transmission Restricted Group, comprising Raipur-Rajnandgaon-Warora Transmission Ltd, Sipat Transmission Ltd, Chhattisgarh-WR Transmission Ltd, and Hadoti Power Transmission Service Ltd, Barmer Power Transmission Service, Thar Power Transmission Service Ltd and Adani Transmission (Rajasthan) Ltd.
“Ratings of IOCL, BPCL and OIL incorporate our expectation of support from the Indian government. Therefore, a downgrade of the rating of the sovereign to Baa3 from Baa2 will result in a downgrade of the respective Baa2 ratings of these companies,” said Vikas Halan, senior vice-president and lead analyst for the Indian oil and gas companies at Moody’s.
“Ratings for Infosys and TCS are constrained to no more than two notches above the sovereign rating. Therefore a sovereign rating downgrade will also result in downgrade of the A3 ratings of Infosys and TCS,” said Kaustubh Chaubal, vice-president and senior credit officer, Moody’s.
There was a change in outlook to negative for the ratings of NTPC, NHPC, NHAI, Power Grid and GAIL. “We have changed the ratings outlook for NTPC, NHPC and NHAI because these firms’ ratings incorporate our expectation of support from the government. Consequently, if the sovereign rating is downgraded to Baa3 from Baa2, we will downgrade the ratings of these companies accordingly,” said Abhishek Tyagi, vice-president and senior analyst, Moody’s.
The change in outlook for the backed senior secured notes issued by Adani Green Energy Restricted Group reflects its dependence on sovereign owned-entities, such as Solar Energy Corporation of India, for more than 70 per cent of the offtake from its power projects, it said.
“Meanwhile, the negative outlook on Adani Transmission Restricted Group’s (P) Baa2 rating, reflects the fact that virtually all of the restricted group’s operations are based in India,” said Spencer Ng, vice-president and senior analyst, Moody’s.