For the transmission sector, Ind-Ra expects stable performance backed by demonstrated available levels in the past, to claim full revenue as per transmission services agreement.
Mumbai: Owing to stable economic growth, India Ratings and Research (Ind-Ra) has maintained a stable outlook on the infrastructure sector, except thermal power, for the financial year 2020. According to the rating agency, despite reasonable energy demand, fuel supply-related issues and constricted demand restrain plant load factor (PLF) of thermal plants to around 62 per cent.
"We have maintained a stable outlook on the infrastructure sector for FY20 mainly on the back of stable economic growth, which underpins road and airport traffic volumes," its director Global Infrastructure Siva Subramanian said. While maintaining a stable outlook for the road sector, Ind-Ra, Subramanian said economic growth-driven traffic and inflation-led toll rates revision support the toll roads sector.
"2019 being an election year, we do not see many road projects being tendered on the hybrid annuity model (HAM). On the contrary, we will see more of EPC projects. Also, along with the economic growth, we have also witnessed a growth in traffic," he said. In a few assets, corridor specific issues such as embargoes on sand/iron ore mining and local political issues dented traffic, could lead to slower recovery.
"However, with peak order book to revenue ratio, FY20 would be a litmus test for some developers. While availability-based roads are stable, mushrooming minor maintenance issues and increased oversight standards reinforce timely maintenance. Therefore, the financial health of the operation and maintenance operator remains a key monitorable for the investors/developers," Subramanian said. For the airports, he said, the sector continues to witness strong passenger growth, however, capacity constraints at many airports could start affecting their operational parameters.
Ind-Ra expects ratings of solar projects to inch up in FY2020, especially for projects with strong counterparties, on timely construction completion and demonstration of stable operations. Maintaining a negative outlook for the thermal power sector, the agency noted that plants dependent on availability-based payments will remain at risk of coal availability, given the sticky inventory level of about 10 days across all major plants in the country.
For the transmission sector, Ind-Ra expects stable performance backed by demonstrated available levels in the past, to claim full revenue as per transmission services agreement. "However, some underperformance are seen in payment realisation from Power Grid Corporation in April-September 2018, and realisation below 95 per cent for the whole of FY2019 may have some negative rating implications if improvement is not seen for a prolonged time period," he added.
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