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Informist, Thursday, Dec. 11, 2025

 

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--Fitch: Failure to hedge FX risk could affect ratings for some Indian cos 
--Fitch: Most rated Indian corporates enjoy a degree of natural FX hedging 
--Fitch: Most rated Indian corporates sustantially hedge FX obligations 
--Fitch: India renewables, power utility corporates vulnerable to rupee fall 
--Fitch: India toll road corporates vulnerable to rupee fall 
--Fitch:Rupee fall unlikely to hit rtg of vulnerable cos' with hedged FX book 
--Fitch: Rating case for India cos is rupee at 87/$1 by 2026-end 
--Fitch: More than 10% rupee fall in 6-12 mos to impact issuer debt ratios 
--Fitch:Over 10% rupee fall in 6-12 mos to hit issuer interest coverage ratio 
--Fitch:L&T benefits from large external earnings, low foreign currency debt 
--Fitch:Ultratech Cement unlikely to face rupee-fall-related rating pressure 

 

MUMBAI – If Indian issuers fail to substantially mitigate foreign exchange risks, there could be downward pressure on ratings of sectors that are significantly vulnerabile to rupee depreciation, Fitch Ratings said. "Fitch Ratings believes most Indian corporates in our rated portfolio either enjoy a degree of natural hedging against movements in the value of the Indian rupee or generally fully or substantially hedge their foreign-currency obligations," it said in its report. 

 

The rupee has depreciated over 5% against the dollar this year, falling to a record low of 90.48250 Thursday, primarily due to a prolonged delay in the trade deal between India and the US. At 1344 IST, the rupee was at 90.40 a dollar and several analysts expect it to fall more in the coming months to 92-93 a dollar. The rating entity expects the domestic currency at 87 per dollar by the end of 2026.
 

If the rupee depreciates over 10% against the dollar over the next 6-12 months, it can lead to a material rise in hedging costs and hence, impact issuer debt and interest coverage ratios, Fitch said. In that case, companies with foreign exchange vulnerabilities will likely continue to substantially hedge their dollar exposures, but any failure to do so could put downward pressure on ratings, it added. However, the fall in the rupee is unlikely to influence ratings of companies who have fully or substantially hedged their foreign-currency debt coupon and principal obligations. 

 

Sectors that generally benefit from export revenues or overseas operations that provide a natural hedge against forex risks include information technology services, pharmaceutical, automotive, and chemicals. Companies dealing with commodity and natural resource also have products whose prices are broadly linked to global commodity prices in dollar terms, the agency said. Issuers in the renewables, power utility, and toll road sectors generally earn revenues in local currency and lack natural hedges, making them more vulnerable to the rupee depreciation, it added. 

 

Larsen & Toubro Ltd. benefits from substantial external earnings and low levels of foreign currency debt. Fitch has a 'BBB+' rating on the company and a stable outlook. For UltraTech Cement Ltd., the agency said the company is unlikely to face depreciation-related ratings pressure though it is more domestically focused. It has a 'BBB-' rating on the cement player with a stable outlook.  End

 

US$1 = INR 90.39

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Anjana Therese Antony

Edited by Tanima Banerjee

 

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