Moody’s on the impact of disruption caused by Covid on Indian infrastructure companies


A container ship docked in India’s Adani Port Special Economic Zone (APSEZ) in Mundra, India.

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The second wave of the coronavirus epidemic in India will affect infrastructure companies in the country to varying degrees, according to Moody’s Investors Service.

Power companies and ports are expected to better resist the impact of disruption caused by the pandemic on airports and toll highway operators, the rating agency said in a recent report.

The South Asian country suffered a devastating second wave when reported coronavirus cases rose sharply between February and early May. This left hospitals overwhelmed and medical necessities like oxygen and drugs in short supply.

While the central government has resisted the imposition of another nationwide lockdown like last year, state authorities have stepped up localized restrictions to stem the spread of the virus – which included regional lockdowns .

“Lockdowns, along with changes in public behavior, are slowing down economic activity and mobility, which will have a varied impact on infrastructure companies,” said Abhishek Tyagi, vice president and senior credit manager at Moody’s, in a press release.

India’s regional lockdowns have resulted in lower demand for electricity as well as lower traffic volumes for transmission companies. But the availability of labor has not been significantly affected so far.

Here’s what Moody’s had to say about the country’s infrastructure companies:


The business models of ranked utilities allow them to handle the current contraction in demand and withstand a moderate extension of the cash conversion cycle, which refers to the number of days it takes a business to convert its investments in cash flow from sales. This is because Indian power companies depend on state-owned distribution companies which are likely to be in financial difficulty due to declining demand.

In the event that demand remains weak for longer and there is a subsequent contraction in liquidity, Moody’s said power companies have good access to liquidity and support.

Airports and toll motorway operators

Moody’s expects the recovery of Indian airports, some of which are the subject of debt-financed expansion plans, to be further postponed due to the second wave and subsequent regional lockdowns. International travel is expected to take even longer to recover due to border closures.

Although domestic and international traffic is expected to increase between October this year and March 2022 – the second half of India’s current fiscal year – Moody’s said the disruption caused by the second wave “will likely cause traffic to drop. and revenues in fiscal 2022, and potentially fiscal 2023, compared to our previous forecast. “

The rating agency downgraded Delhi International Airport this month to a B1 rating – considered speculative and high credit risk – indicating that the airport will likely need additional debt to complete its expansion in due to lower operating cash flow.

An increase in Covid vaccination rates in India could be a major driver of recovery for airports, according to Moody’s.

Extended restrictions on movement or renewed closures will continue to negatively impact toll highway operators and put pressure on their credit standing, the rating agency said.


Indian ports assessed performed well over the past fiscal year despite the economic contraction due to the pandemic and were able to improve their market shares, according to Moody’s.

Port operators have for the most part not been affected by the regional closures as “the flow of goods across the country has remained normal and the two ports also have sufficient headroom in their financial profiles to absorb any temporary disruption,” said declared Moody’s.

Path to economic recovery

Daily reported Covid-19 cases in India have been on a downward trend since peaking in early May. As the situation gradually improves, many states are easing restrictions to reopen the economy, but experts have warned of an inevitable third wave of infections.

Moody’s stressed that with vaccination rates still relatively low, this leaves open the risk of subsequent waves of infection that could push states to introduce further blockages.

“The government’s ability to limit the spread of the virus and dramatically increase its vaccination campaign will have a direct impact on economic recovery,” the rating agency said.

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