Mumbai: Fitch Ratings expects India to be among the world's fastest-growing countries, with resilient GDP growth of 6.5 per cent in 2024-25. For the current financial year 2023-24, it pegs GDP growth at 6.9 per cent.
The global rating agency said that it expects the robust economic growth to boost demand at corporates, despite weakness from slowing growth in key overseas markets. This, and easing input cost pressure, should boost profits in the financial year ending March 2025 (FY25) by 290 basis points above FY23 levels, helping corporates maintain adequate rating headroom, despite higher capex.
“India’s robust economic growth will boost demand at corporates, despite weakness from slowing growth in key overseas markets,” Fitch ratings said in a statement on Friday.
“Demand will remain strong for cement, electricity and petroleum products, with high frequency data in 2023 sustained at well above pre Covid-19 pandemic levels. India’s rising infrastructure spend will also boost steel demand. Car sales will continue to rise, despite our expectation of moderation after a robust growth in 2023,” it added.
Slowing demand in the US and eurozone is likely to moderate sales growth for IT services, but a corresponding easing of employee attrition and wage pressure should underpin higher profitability and solid rating headroom at rated IT services companies. Rising demand will help maintain industry balance in cement and steel sectors, despite a faster pace of new capacity additions.
Refining margins at oil marketing companies are likely to stay above mid-cycle levels in the near term, while lower crude oil prices after FY23 should support marketing profitability. Margins at India’s top-two telecommunication companies will continue to benefit from ongoing industry consolidation.
”We believe India’s structural demand visibility, supply-side reform by the government and healthier corporate and bank balance sheets will enable a further increase in capex across most sectors following an uptick in FY23.”
