Moody’s on impact of Discomfort caused by Covid on The infrastructure companies of India

A container ship docked in the Port of Adani Special Economic Zone (APSEZ) in India in Mundra, India.

Sam Panthaky | AFP | .

of India second wave of According to Moody’s Investors Service, the coronavirus outbreak will hit the country’s infrastructure companies in various measure.

Power companies and ports should better withstand the impact of inconvenience caused by the pandemic in comparison with airports and toll roads operators, the rating agency said in a recent report.

The South Asian country suffered a devastating second when reported coronavirus cases increased sharply between February and early May. is left overwhelmed hospitals and medical needs like oxygen and medicines in are in short supply.

While the central government resisted the imposition of another national bloc like last year’s, the state authorities intervened up localized restrictions to stem the spread of the virus, which included regional blocks.

“The lockdowns, together with public behavioral changes, are holding back economic activity and mobility, which will have a mixed impact on infrastructure company “, Abhishek Tyagi, vice president e senior Moody’s credit officer said in a declaration.

Regional blockades in India have led to a reduction in electricity demand as well as lower traffic volumes for transport company. However, the availability of manpower has not been affected so far in meaningfully.

Here’s what Moody’s said about the country’s infrastructure companies:


The business models of rated power companies allow them to handle the current contraction in demand and withstand moderate to moderate extension of the cash conversion cycle, which refers to the number of days it takes for a business in to convert your investments cash sales flows. This is because Indian power companies are employees on state-owned distribution firms that may be under financial stress due to minor demand.

In event that demand stays low for longer and there is a later cash squeeze, Moody’s said that power companies have good access liquidity e support.

Airports and toll roads operators

Moody’s expects the recovery of Indian airports, some of they are undergoing debt-financed expansion plans, will be pushed back further due to the second wave and subsequent regional lockdowns. International travel is set take even longer to recover from border closures.

Although domestic and international traffic is set for rise between October this year and March 2022 – the second half of of India current tax year – Moody’s said the outage caused from the second the wave “probably” lead to reduce traffic and revenue in fiscal year 2022 and potentially fiscal year 2023, compared to our previous forecasts. “

The rating agency downgraded Delhi International Airport this month to a B1 rating – seen as speculative and high-credit risk – stating that the airport probably need additional debt for complete its expansion because of inferior operating cash flow.

An increase in Covid vaccination rates in India might be important to driver for a recovery for airports, according to Moody’s.

Prolonged restrictions on movements or renewed blocks will continue to have an adverse adverse impact on toll road operators and put pressure on their credit quality, the rating agency said.


of India rated the ports performed well in the last tax year despite the economic contraction due to the pandemic and have managed to improve their own market shares, according to Moody’s.

Door operators have remained mostly unaffected by the regional blocs because “the movement of goods in the whole country remained normal and both ports also have sufficient buffer in their financial profiles to absorb any temporary outages, “Moody’s said.

Economic path recovery

Cases of Covid-19 reported daily in India was on a downward trend from reaching a peak in early May. As the situation gradually improves, many states are loosening restrictions to reopen the economy, but experts have warned against an inevitable third wave of infections.

Moody’s bet out that with still relatively low vaccination rates, leave the open risk of successive waves of infection that could push states to introduce further blocks.

“The government’S ability limit the spread of the virus and materially increase its vaccination drive will have a direct impact on the economic recovery”said the rating agency.

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