Fitch: Short-term outlook for Indian construction is stable

Fitch Ratings said the outlook for the Indian construction sector remains stable for the second half of 2012 despite the continued unfavorable macroeconomic environment, as some of the risks have already been factored into the ratings.

However, the medium-term outlook could be affected by ongoing challenges in execution, coupled with high interest rates and lackluster equity markets, the agency said.

Fitch is concerned about the construction sector's growing order book position amid slowdown in project execution, as this impacts cash flows and leads to higher working capital requirements. Also, companies are facing delays in raising debt for build-operate-transfer/build-own-operate-transfer projects, the agency added.

Fitch-rated Indian construction companies include IOT Infrastructure & Energy Services Ltd. (Fitch AA-(ind)/stable), Tata Projects Ltd. (Fitch AA-(ind)/stable), SEW Infrastructure Ltd. (Fitch A+(ind)/stable), IVRCL Ltd. (Fitch A+(ind)/negative), Hindustan Dorr-Oliver Ltd. (Fitch A(ind)/negative) and IRB Infrastructure Developers Ltd. (Fitch A-(ind)/stable).

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