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India Ratings and Research has revised its outlook on the base metals sector to negative for FY21 from stable.
The coronavirus outbreak, continuing US-China trade dispute and subdued global demand would keep base metal prices low in the near term. The prices may gradually improve as the epidemic is contained and the second phase of US-China trade negotiations is concluded. As part of its study, the agency has covered the copper, zinc, aluminium and coal sectors.
Ind-Ra however, has maintained a stable outlook for FY21 on the key rated sector entities, given the majority of them enjoy adequate liquidity, strong financial flexibility, a low-cost environment, and dominant market position.
The key sector participants include Vedanta Limited (IND AA/Negative), National Aluminium Company Limited (IND AAA/Stable) and Hindalco Industries. Ind-Ra expects the entities to record, on consolidated basis, revenue growth of 5.5-6 per cent year-on-year, EBITDA margins in the range of 18-19 per cent, and steady net leverage of about three times in FY21.
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