“We are seeing sequential improvement in some of the high frequency monthly economic indicators which are on expected lines as we do expect quarterly GDP growth to improve over Q1 and turn marginally positive in Q4,” said Ajay Mahajan, MD & CEO of CARE Ratings.
“The announcement of on-tap TLTROs and the government's additional spending on capex should help to revive private investment and we would be keenly watching whether this will lead to more differentiated issuances in the bond market which is still biased towards the financial sector,” he added.
For the first half (April-September) of the financial year 2020-21, the rating agency’s consolidated profit after tax declined 4 per cent to Rs 47.94 crore, while operational revenue fell 5 per cent to Rs 113 crore, over the same period of the previous fiscal.
The board has approved the payment of an interim dividend of Rs 8 per equity share of the face value of Rs 10 each for the financial year 2020-21.
The company said in a regulatory filing on Tuesday that the macro-economic environment, though improving since June due to the unlock measures, is still in the negative territory as evidenced by the growth in credit to manufacturing and services which are the quick indicators of economic activity.
Within manufacturing, growth in credit to large industry declined by 5.1 per cent while that to micro, small and medium increased due to the guarantee support provided by the government. Further, with the industry having surplus capacity with the utilisation rate being 47.3 per cent in June investment level was low. Therefore, fresh investment in this sector would be delayed until utilisation rates reach the optimal level. Corporate bond issuances were higher while commercial paper (CP) issuances lower.
Despite a sharp run-up today, the stock of CARE Ratings has underperformed the market by falling 15 per cent, against a 7 per cent gain in the S&P BSE Sensex in the past three months.
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