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India Ratings maintains negative outlook on Indian infrastructure sector

The outlook for power projects, barring renewables, remains negative…

Credit rating and research agency, India Ratings & Research said on Thursday that the overall outlook for the infrastructure sector remains negative for the financial year 2014-2015. The outlook for power projects, barring renewables, remains negative, while highways sector remains stable in pockets.

The agency said that it does not expect a sharp movement in the infrastructure sector’s fortunes at least in the first half of 2014-2015, post the Lok Sabha elections. However, policy support from the government may help.

For power, the agency said, the full benefits of the numerous measures taken by the government, will actually trickle down to power-generating project assets post the next financial year. Renewables segment, on the back of reduced construction risk, stable operating performance and remunerative tariffs provides a silver lining to an otherwise ?dark? sector, it said.

“Prolonged uncertainty surrounding economic conditions, over-ambitious traffic estimates and enhanced construction risks (to name a few) have plagued the road sector for some time now. The expected continuance of the current situation in the near term will continue to be a drag on the project cash flows of toll road assets,” India Ratins noted. However, stable and assured revenue streams from highly rated counterparties and standard maintenance requirements are the dominant reasons for the stable outlook on annuity road projects.

Airport sector outlook has been revised to stable for the coming year from negative, due to the progress on completion of expansion plans, regulatory clarity on tariff fixation and sustained growth in international traffic (specially against the headwinds of a weak global economy).

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First published on: 13-02-2014 at 20:06 IST
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