- Despite the decrease in ratings, these companies will maintain investment-grade
- TCS and Infosys rating two levels above country's rating
Jul 03, 2020, 08:07 PM IST
new Delhi. Moody's Investors Service rated Tata Consultancy Services (TCS), Infosys and Reliance Industries higher than the country's credibility. These companies have been given high ratings due to strong financial position and worldwide earnings. Moody's said that despite a negative outlook on the country's BAAA3 rating, giving a stable rating to Genpact and UPL means that their ratings will not change even if the country's ratings fall to BA1.
Despite good credit quality, ONGC and Petronet LNG have BAA 3 rating
The international rating agency has kept the ratings of the two other companies at par with the sovereign rating of the country. The credit quality of Oil and Natural Gas Corporation (ONGC) and Petronet LNG is stronger than the credit quality of the country. But these companies have a very strong relationship with the government and other government institutions, so the rating of these two companies is kept BAA3.
IT companies have better rating than the country due to less dependence on household income
Investment grade IT companies have been rated at two levels above the country's rating due to their low dependence on global operations and household income. TCS and Infosys are rated two levels above the country's rating. Their credit profile and geographical diversity of their business operations are much better than Genpact. Despite this, even if the country's rating is reduced to BA 1, the current rating of Genpact will remain.
Reliance Industries' rating is one level above the country's credibility
Reliance Industries has been rated one level above the country's rating due to its broadness and diversity of business and balanced funding mix. Reliance's digital services and retail business has added more to the country's economy, so even if the credit metrics are better, the company does not meet the rating requirements two levels above the country's rating.
UPL's rating will not decrease due to decreasing country's rating
UPL has been rated as one level above the country due to its worldwide dependence on customer and manufacturing complexes and low dependence on the income of the country. Despite the country's negative outlook, its stable outlook means that even if the country's rating is reduced to BA 1 and other things remain, the current rating of UPL will remain intact.
9 companies with investment grade rating will be reduced as country ratings fall
If the sovereign rating falls to BA 1, 9 out of 11 investment grade companies may have a rating of one level. Only UPL and Genpact's current BAA3 ratings will remain. TCS, Infosys and Reliance will remain investment-grade even as ratings decline. But when this happens, six government or government-linked companies will lose their investment-grade.