Indian airline operators and airports have been the first and the most adversely affected sector. Restrictions on the movement of the people have resulted in sharp drop of their cash flows. Players are heavily levered and consequently their debt servicing ability is expected to be severely affected.
Auto ancilliaries & original equipment manufacturers
Auto ancilliaries could face significant disruptions related to supply of key parts from China, Germany and south east Asian countries. Though China has resumed production, the lockdown
in India has resulted in production cuts by major original equipment manufacturers and a sub par demand for new vehicles.
A fall in the global economic prospects woud impede both domestic and world demand. Consequently, steel prices are likely to remain under pressure. Although, global iron ore and coking coal prices are expected to be softer owing to the muted demand from China. Additionally, several firms have recently expanded their balance sheets which has increased their leverage levels. As a result, their credit buffers could experience some pressures over the near to medium term.
Hospitality has direct and immediate impact from the restrictions on the movement of people. Also, all modes of public transport are grounded. The impact will be more severe on the four-star and above categories since their occupants are business and foreign tourists and there is negligible demand from both. Hence, the occupancy rate could be 20-25 per cent for this category of hotels, while two-star and mid-scale hotels could witness occupancy rates of 30-40 per cent till May 2020.