Tag: Icra

ICRA revises India’s cotton outlook to stable from negative

ICRA revises India’s cotton outlook to stable from negative

30/06/2017 12:00

Favourable weather conditions and remunerative prices are expected to improve the cotton supply situation in India in the next one year, ICRA said, revising its outlook for cotton to stable from negative.

The rating agency estimates the domestic cotton output to increase by around 6 per cent to 36 million bales in 2018.

“A few initial weeks of the cotton sowing season have already witnessed increased acreage vis-a-vis last year and the trend is expected to sustain. This is likely to be complemented by the forecast for normal monsoons, with the possibility of El Nino formation gradually waning,” ICRA said.

India’s cotton-spinning industry has been facing twin challenges of subdued demand and high cotton fibre prices as a result of tight cotton availability since the July 2016. Amid a decline in exports to China and subdued domestic demand following the demonetisation drive, the growth in total spun yarn production declined to a five-year low in 2016-17.

“The expectations of higher output in the upcoming cotton season supported by increased sowing and a favourable monsoon forecast is likely to create a downward bias in cotton prices from Q2 FY2018 onwards, vis-a-vis the peak levels witnessed during the past one year. This augurs well for the domestic cotton spinning industry,” said Jayanta Roy, Senior Vice- President and Group Head, Corporate Sector Ratings, ICRA.

According to the rating agency, despite the weakness in production and sales volumes, domestic cotton yarn prices continue to be firm following the high cotton prices. However, the possibility of a further increase in cotton yarn prices is low due to weak export prospects.

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Housing credit growth moderates to 16% in FY17: Icra

20/06/2017 16:53

Total housing credit growth moderated to 16 per cent in the financial year 2016-17 due to lack of new project launches and as investors deferred their home purchase decisions, according to rating agency Icra.

In the financial year ended March 2016, the housing credit grew by 19 per cent.

Overall housing credit stood at Rs 14.4 trillion as on March 31, 2017 as against Rs 12.4 trillion as on March 31, 2016.

“The growth in the sector (in FY17) was impacted by a slowdown in new project launches with buyers and investors deferring their home purchase decisions in expectation of a decline in real estate prices,” Icra said in a report here today.

While the slowdown was across both housing finance companies (HFCs) and banks, the decline in the pace of growth of the latter was higher – from 18 per cent in FY 2016 to 15 per cent in fiscal 2017. It was largely because banks were operationally tied up in second half of FY 2017 on account of demonetisation, the report said.

“HFCs operating in the affordable housing space, with a total portfolio of Rs 1.2 trillion, continued to grow at a faster pace of 28 per cent in the previous fiscal compared to the industry,” Icra’s senior vice president and group head (financial sector ratings), Rohit Inamdar, said.

HFCs’ growth was supported by increase in supply due to launch of affordable housing projects and the infrastructure status accorded to the sector. They were also helped by the improved borrower affordability supported by lower interest rates and the credit-linked subsidy scheme, Icra said.

Traditional lenders that have historically focused on the prime segment have also started lending to this segment, the report said.

The rating agency expects affordable housing finance to continue to outpace the industry, going forward as well.

Icra expects HFCs’ gross non-performing assets (NPAs) to remain range-bound between 0.9-1.3 per cent in the current financial year.

ICRA upgrades credit rating of Wheels India

02/12/2016 14:10

Auto component manufacturer Wheels India Ltd on Friday said that the credit rating agency, ICRA, has upgraded the rating on short term borrowings to ‘[ICRA]A1+’ from ‘[ICRA]A1’.

In a filing to the Bombay Stock Exchange, the company said, “The credit rating agency ICRA, has upgraded the rating on short term borrowings to ‘[ICRA]A1+’ from ‘[ICRA]A1’.”

Meanwhile, shares of the company were trading at Rs 1,170.10 apiece, down 1.29 per cent, from previous close on BSE at 14:11 hours.

Icra sees muted growth in tyre demand over next 3 yrs

05/07/2016 12:23

Demand for tyres in Asia’s third biggest economy is likely to witness a growth of 6-7 per cent over the next three years ending FY 19, supported by demand from the Original Equipment Manufacturer (OEM) segment amidst a pickup in economic activity and higher replacement sales, leading rating agency Icra predicts in a report.

Icra sees a revival in rural spending amidst a strong monsoon to lead to higher OEM demand for the two-wheeler and tractor segments.

“Over the next three years, ICRA expects the domestic tyre demand to report a 6-7% volume growth, supported by a broad based revival in OE demand and economic activity in the country driving urban purchases”, Icra said.

Meanwhile, domestic tyre demand in India is likely to have grown by a muted 4-5 per cent during FY 2016 amidst a slowdown in OEM demand.

The report also highlights the continued threat that the domestic tyre industry faces from cheap Chinese imports, calling for stringent corrective actions by regulatory authorities.

Even as it expects a 9 per cent growth in industry wide realistions in the ongoing fiscal, operating margins are set to shrink by 250-300 bps “with a modest increase in raw material (RM) prices, hike in wage costs and increased fixed costs (with large capacities getting commissioned)”, Icra said.