Indian companies are set to invest $45-50 billion annually over the next 1-2 years to enhance its market capacity and presence, aiming for greater vertical integration and net-zero targets. The US-based credit agency projects India’s GDP to grow by over 6% in the next two years.
Sep 4, 2024
Moody’s Ratings predicts robust growth for Indian companies, which will spend anything between USD 45-50 billion annually over the next 1-2 years to boost their capacities and strengthen their presence in different markets.
As per a recent report by the American credit rating agency on corporates in India and Indonesia, India will also invest to increase vertical integration and achieve net zero targets.
It says with an annual capex budget of around USD 15 billion spread across its different business segments, Reliance Industries Limited (RIL) will account for around 30 percent of the total spendings in the next 1-2 years.
Seven rated companies of the oil and gas sector in India will spend around USD 15 billion annually to expand their existing capacities and make green energy investments to reduce carbon transition risk, accounting for around 30 percent of the capex portfolio. These include the Oil and Natural Gas Corporation (ONGC) Limited and Indian Oil, which will spend USD 6 billion and USD 4 billion, respectively, in each of the next two years on reserves addition, downstream integration and energy transition.
As per Moody’s, robust earnings are expected to maintain low leverage among Indian corporates, despite ongoing capital spending plans driven by consumption growth and high offshore borrowing rates.
The credit quality will remain sturdy for companies in India and Indonesia, the two largest emerging market economies in Asia excluding China. The two G-20 countries have the highest number of rated companies and volume of rated debt among emerging economies in the region outside of China. The US-based credit agency estimates India’s GDP to grow at over 6 percent over the next two years.
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The domestic demand will be the main driving force behind India’s growth. The report says India’s economy is well diversified across services and manufacturing. The country’s large domestic market helps to shelter it from fluctuations in external demand. However, the leverage for rated companies in India is expected to remain low. Moody’s expects the earnings for these rated Indian companies to grow 5 percent over the next couple of years. It says many companies will benefit from the broad-based growth across various sectors, including metals, mining & steel, telecommunications, and automobiles.
