HPCL, IOC, APSEZ to benefit most from rupee fall: Fitch

HPCL, IOC and Adani Ports and Special Economic Zone (APSEZ) will benefit the most from the rupee’s depreciation as their dollar earnings are sufficient to more than offset the negatives of higher debt and capex in dollar terms, says a Fitch Ratings’ report.

However, Power Grid Corporation of India, NTPC, Bharti Airtel and Lodha Developers Pvt Ltd tick all three negative boxes of minimal earnings in dollars, dollar-denominated debt and dollar-denominated capex, Fitch said.

The report highlights those Indian corporates whose financial profiles could strengthen or weaken if the rupee were to depreciate by 15 per cent and 30 per cent.

Fitch specifically highlights nine Indian corporates whose financial profiles would deteriorate and conversely eight corporates that are likely to benefit.

The report examines the impact of currency depreciation on both balance sheet and cash flow, and shows the resultant impact on net leverage for each corporate under both 15 per cent and 30 per cent currency depreciation scenarios.

“From a balance-sheet perspective, most Indian corporates will be negatively affected due to their exposure to foreign-currency debt.

“However, at the EBITDAR level, we do not expect any Indian corporate to be negatively affected by a lower rupee, and in fact anticipate that 14 corporates will experience higher EBITDAR, thanks to US dollar-based revenues and limited cost increases,” Fitch said.

It further said that at the cash flow level, “we estimate that the negative of higher capex in dollar terms, will not negate the positive benefit of higher EBITDAR for most corporates”.

The rupee today continued its upward march against the US dollar for the third day, firming up by another 10 paise to 66.00 on fag-end selling of the American currency by banks and exporters on the back of lower greenback in the overseas market.

Hindustan Petroleum Corporation Ltd.(HPCL)

Indian Oil Corporation