The rupee's recent fall is likely to support the profits of about 70 per cent of the companies rated by rating agency Standard & Poor's (S&P).
In a report on the rupee's depreciation, S&P said, "Revenue for companies that export and operate overseas would rise, because they would get more rupees for the goods and services they sell."
S&P credit analyst, Mehul Sukkawala, said, "Companies that link their selling prices to global prices can now also command a higher price in the domestic market." Such gains would soothe the pain that weak demand -- both in India and globally -- has been inflicting on Indian companies.
However, this benefit comes at a cost. Debt-servicing requirements would increase, particularly for companies with a high share of foreign currency borrowings.
The debt servicing and financial leverage of only 30 per cent of the companies S&P rates in India are likely to improve, owing to the depreciating rupee.
"We believe the risk is particularly high for companies that have high
debt servicing requirements, due to significant foreign currency borrowings coming up for repayment in the near term," Sukkawala said.
However, of the companies S&P rates in India, only a few have material near-term maturities. The rating agency expects these companies to refinance most of their debt maturities through foreign currency borrowings. Most of these have adequate or strong liquidity and good domestic banking relationships.
Large Indian information technology companies like Tata Consultancy Services (BBB+/stable/--) are likely to be the major gainers from the rupee's fall, since these have strong foreign businesses and very little debt.
At the other end of the spectrum are companies like Bharti Airtel (BB+/Stable/--), which have a large share of foreign currency borrowings that offset the benefits of good operating performances.
The impact would generally be positive for information technology, metals and mining, and oil and gas refining and exploration companies.
It would be neutral for telecommunications companies and power utilities, and negative for oil marketing, automobile, and forest product companies.
In a report on the rupee's depreciation, S&P said, "Revenue for companies that export and operate overseas would rise, because they would get more rupees for the goods and services they sell."