Hindustan Petroleum Corporation Limited, Indian Oil Corporation Ltd and Adani Ports and Special Economic Zone Limited are among the Indian companies that will benefit the most from the rupee’s depreciation against the dollar, while Power Grid Corporation of India Ltd, NTPC Limited, Bharti Airtel Limited and Lodha Developers Private Ltd will be among the biggest losers from such a development, Fitch Ratings said in a special report published today.
Fitch Ratings gives advice and data about the creditworthiness and finances of companies and other borrowers.
The report was based on the hypothesis that the Indian rupee depreciates by 15% and 30%.
The benefiting companies have dollar earnings that are sufficient to more than offset the negatives of higher debt and capex in dollar terms, it said.
However, the negatively impacted companies have minimal earnings in dollars, dollar-denominated debt and dollar-denominated capex.
The report delves into the impact of currency depreciation on both balance sheet and cash flow, and shows the resultant impact on net leverage (adjusted net debt/operating EBITDAR) for each corporate under both 15% and 30% currency depreciation scenarios.
“From a balance-sheet perspective, most Indian corporates will be negatively affected due to their exposure to foreign-currency debt. However, at the EBITDAR level, we do not expect any Indian corporate to be negatively affected by a lower rupee, and in fact anticipate that 14 corporates will experience higher EBITDAR, thanks to US dollar-based revenues and limited cost increases,” Fitch said.
At the cash flow level, we estimate that the negative of higher capex in dollar terms, will not negate the positive benefit of higher EBITDAR for most corporates, it added.