Rating agency Standard & Poor's (S&P) today said it does not see corporate investments picking up before FY17 and called for more structural reforms to help private firms recoup their balance-sheets.

"We don't see capex cycle of private firms reviving before the next 12-18 months, and definitely not before FY17.

Capex improvement can return only if government unleashes more reforms, which can help these companies ensure better cashflows," S&P South Asia Senior Director (Corporate Ratings) Mehul Sukkawala said in a conference call today.

He said the recent pick up in economic momentum could give plenty of growth opportunities to the country's top corporates, who are waiting for the Government to put policy announcements into action before investing further.

Sukkawala said top 100 corporates, who have a collective debt of USD 300 billion as of FY14, have nothing much to worry as their leverage levels at 1.5 times are much lower than their Chinese or other Asian peers.

However, he added that these top companies have been lapping up cheap forex debt in the past few years due to the higher rate regime in India.

More than 50 per cent of them have under 1.5 times debt over their equity, while 25 per cent of them, mostly from the utilities, infra and metals and mining sectors, have more than that debt, the S&P Director added.

Since FY12, debt of these corporate have nearly doubled, though - from Rs 10.5 trillion in FY12 to Rs 18.5 trillion in FY14. In FY13, the debt level of these companies rose at Rs 15 trillion, he said, adding most of these debts are rupee-denominated. He could not offer a forex currency rupee loan break-up though.

"The key to corporate growth will be whether the Government can deliver on its reform promises. If it does, we believe the top players will be ready to capitalise.

"In the meantime, we believe the corporate sector will maintain its conservative stance toward growth rather than throw caution to the wind." 

"The issues identified with domestic corporates - over indebted and under-performance - are concentrated in just a handful of sectors, albeit critical ones - utilities and infrastructure, and metals and mining," Sukkawala said.

Overall, India is a global bright spot for investing from a credit risk perspective, he said.

On the capex cycle revival, he said "companies are likely to consider new projects only after they see the operating environment improving at the ground level." 

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