The size of risky loans is expected to increase by Rs 60,000 crore in the current financial year due to factors such as high inflation due to the Russia-Ukraine war, the rating agency India Ratings gave this warning in a report on Monday.
According to the report, due to these problems facing the economy, by the end of the financial year 2022-23, the amount of risky debt will be Rs 6.9 lakh crore. Had the Russia-Ukraine war not broken out, the debt-to-risk ratio in the current financial year would have remained at Rs 6.3 lakh crore.
By risky debt, the rating agency means more than five times the debt taken by the rating agency keeping in view the operating profit of the companies.
The rating agency has given this estimate on the basis of an analysis of 1,385 companies. In such a scenario, it has forecast a cut in revenue growth forecast for companies in the post-war scenario as well as a reduction in profit margins on account of higher commodity prices.
According to the report, a hike of up to one per cent in interest rates in the current financial year and depreciation of 1-10 per cent in the rupee could put pressure on margins.
The agency said a rise in commodity prices and a firming interest rate could have a disproportionate impact on companies and entities operating in different sectors.
Large-sized companies will be able to show flexibility due to good bookkeeping, easy access to financing and pricing power, while small and medium companies may have to deal with these difficulties.