India Ratings & Research has revised the overall outlook on the infrastructure sector from negative to stable for financial year 2015-16. This is in spite of having mixed outlook on the sub-sectors.

According to the agency, the ongoing measures by the government and regulators to address the fundamental shortcomings on the policy side could gradually rebuild dwindling stakeholders’ confidence in the sector.

Although these measures will steer the sector in the right direction, a substantial shift from the current path is unlikely in financial year 2016-17.

While the government actions for addressing fuel-related risks through the re-auction of coal blocks, facilitating approvals and clearances and the marginal improvements in the counterparty credit profile are encouraging, the thermal power sector is yet to completely clear out the excess baggage of the past.

The fuel supply position at many thermal plants has remained lower-than-comfortable. Should the receivable days of these plants increase, the project companies will have to additionally leverage. This could lead to more expensive power. Given the stressed liquidity position of the sponsors, it could be tough to augment funds.

During FY 2016, there is a negative outlook on toll roads reflecting the anaemic growth-driven traffic. While the airport segment outlook is seen stable, for ports it has been revised to stable from negative.

While there is potential for consolidation, a buoyant economy would be conducive for raising the much-needed equity and for asset sales.

Further, if the economic fundamentals and policy interventions play out favourably, the infrastructure sector is poised to witness renewed investor interest.

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