Crisil report says rupee volatility unlikely to impact corporate credit profiles

A recent report released on Tuesday indicates that the overall credit profiles of the Indian rupee are expected to remain stable despite recent volatility against the US dollar. Crisil Ratings' analysis suggests that while certain industries may face short-term pressure on earnings, this impact is unlikely to affect companies' medium-term financial stability.

Although a weaker rupee may result in higher import costs for some industries, the study notes that businesses are well-positioned to manage the change through various methods, including pricing strategies, hedging techniques, and subsidies. The rupee's depreciation is also expected to benefit a number of export-oriented industries, potentially boosting their profits in the near term.

Industries such as information technology (IT), home textiles, and marine foods, which generate a large share of their revenue from exports while having limited import exposure, stand to gain. This could improve their profitability, depending on how much of the benefit is passed on to customers. Crisil notes that supportive policies and hedging practices help mitigate the impact even in industries with significant exposure to imported inputs or foreign exchange liabilities, such as complex fertilizers, oil and gas, and airlines.

According to the report, if the government provides subsidies to fertiliser producers, and with more than half of airline leasing commitments already hedged, the overall exposure is contained. Additionally, the oil and gas sector benefits from currently favourable global crude oil prices.

Companies in capital goods, pharmaceuticals, and renewable energy are also expected to adapt well; in fact, some may even benefit due to their export-driven models.

Meanwhile, industries with strong pricing power or a natural hedge through balanced import-export exposure—such as steel, chemicals, ceramics, gems and jewellery, city gas distribution, and edible oils—are expected to experience minimal impact.