Moody’s Ratings projects that Indian companies will invest $45-50 billion annually in the next 1-2 years to enhance capacity, with Reliance Industries leading the expenditure at 30%. These investments aim to boost vertical integration and achieve net zero targets, keeping expenditure high across various sectors. The oil and gas sector, along with Reliance Industries, will account for over 60% of spending, with seven oil and gas companies contributing around 30% of the total capex.
Despite the high spending, strong earnings will maintain low leverage for Indian corporates as they respond to consumption growth and high offshore borrowing rates. Moody’s foresees robust credit quality for companies in both India and Indonesia, the two largest emerging markets in Asia after China. India’s GDP growth is projected to surpass 6%, driven by domestic demand and government infrastructure spending, insulating companies from external shocks.
Overall, Moody’s expects a 5% earnings growth for rated Indian companies, benefiting from growth in sectors like metals, mining, telecommunications, and automobiles. With a well-diversified economy and low leverage, India’s corporate sector is set for stable growth in the coming years.
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