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COVID-19 pandemic impact to be severe, prolonged for aviation, hospitality, retail: ICRA
Aug-11-2020

Ratings agency ICRA in its latest report has said that the financial performance of corporate sector will be significantly impacted due to extended lockdowns after the outbreak of the coronavirus (Covid-19). It said the impact is likely to be severe and prolonged for select sectors, especially aviation, hospitality, retail and allied businesses. It noted that the pandemic, followed by extended lockdowns in India both nationally and then localised, has impacted India Inc for the major part of the first quarter of the current financial year.

According to the report, the economic activity started to recover from the troughs experienced in April when the lockdown was at its severest and many sectors seem to be adjusting to a new normal. However, it said the unabated rise in COVID-19 cases in the unlock phase and localised re-imposition of lockdowns in several states have interrupted this recovery in recent weeks. It also said the financial performance of corporate sector would be significantly impacted, as manufacturing, construction, industrial and consumption activities have taken a sharp hit.

The report further said overall, Q1 FY2021 will be a washout for India Inc, with significant pressure on revenues and earnings, considering that the major part of the quarter was under lockdown or gradual ramp-up phase. It noted that with continuing fixed overheads and virtually no revenues, the earnings and margin profile of the corporate India are expected to have deteriorated quite sharply during the quarter, despite some recovery towards the end. Furthermore, it said with gradual recovery expectations during the rest of the fiscal, and the current subdued macro-economic environment, pressure on earnings and credit profiles are expected to continue over FY2021. 

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