Resilient growth outlook to offset slowdown in foreign market for India Inc: Fitch

India’s resilient growth outlook will offset a slowdown in overseas markets for the country’s corporates and easing input cost pressure will help widen their profit margins, Fitch Ratings said on Friday.

Earlier this month, Fitch had raised India’s economic growth forecast to 6.3 per cent for the current fiscal year 2023-24 from the 6 per cent it had predicted previously. The sustained economic growth will drive cement and petroleum product demand, with high-frequency data trending above pre-pandemic levels so far this year. India’s rising infrastructure spending will also boost steel demand, Fitch added.

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“India’s resilient growth outlook will offset a slowdown in overseas markets for the country’s corporates and easing input cost pressure will widen profit margins by around 220bp in the financial year ending March 2024,” Fitch said in a statement.

Slowing demand in the US and the Eurozone will moderate sales growth for the IT service sector. However, a corresponding easing of wage pressure and attrition, along with IT service companies solid rating headroom, will support their credit profiles.

Increasing marketing margins from moderation in crude oil prices and refining margins staying above mid-cycle levels will drive oil marketing companies profitability higher, Fitch said. “We have an improving outlook for Indian telcos as we expect continuous industry consolidation to support profitability for the top-two telcos, and monthly average revenue per user to rise by 10%-15% in 2023,” Fitch added.

(With agency inputs)