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Ind-Ra maintains 'stable' outlook on India's infrastructure sector for rest of FY19

The India Ratings and Research (Ind-Ra) in its latest report has retained its outlook on India's overall transport infrastructure sector including toll roads, annuity roads, hybrid annuity model (HAM) projects and airports at 'stable' for rest of fiscal year 2019 (FY 2019), except for coal-based thermal power, which continues with its negative outlook. The rating agency said that the outlook on airports reflects limited upward rating movements but it expects continued growth in passenger volumes despite capacity constraints. Besides, it expects revenue for toll roads to grow at around 9% y-o-y in FY19, supported by toll rate growth of about 4.2%. 

For HAM projects, it said that although these projects have enabled resumption of private participation, there is some pressure on the financial closure front, as banks, especially public sector lenders, are going slow on financing there projects due to lack of appetite and lending freeze on many of these lenders. Regarding annuity roads, it said that National Highways Authority of India (NHAI) has demonstrated its stable payment track record across the Ind-Ra rated projects over the years.

Ind-Ra stated that the non-pit head plants, for coal-based thermal power, are facing irregular coal supply, leading to a high risk of declaring availability lower-than-required/normative level. It further also added that competition in short-term market is expected to deepen if there are postponement in dealing with these problems and absence of long-term power purchase pacts.

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