Chennai, Jul 5 (IANS): Fitch Ratings forecast strong medium-term
growth to support the demand for India's steel, cement and chemicals sectors,
with improved economic activity boosting power and petroleum product sales.
The credit rating agency also said
the adequate balance sheet buffers and strengthening demand should mitigate
pricing and cost pressure at most rated Indian corporates.
According to Fitch, the steel prices
in the medium-term are likely to moderate due to the industry's demand and
supply dynamics, while cement prices will be pressured by added capacity from
large manufacturers over the next few years.
As regards the near-term fuel prices,
Fitch said it will be a function of the government's efforts to balance fiscal
needs, inflationary pressure and the financial health of oil marketing
companies.
Rising energy prices are likely to
pressure the margins of steel manufacturers, auto suppliers, cement producers,
chemicals manufacturers and oil marketing companies, despite government
intervention to manage surging inflation, the rating agency said.
Meanwhile, the information technology
services, telecom and pharmaceutical sectors face moderate wage and input cost
risks, balanced by high utilisation rates and a better ability than industrial
sectors to pass on higher costs to end consumers.
A generally supportive regulatory
framework limits exposure to cost inflation for electricity generation
companies and network utilities, while strong oil and gas prices will widen
margins at upstream companies.