 "Rupee")
Rating agency Crisil today said corporates, especially those in the auto, aviation, consumer durables and oil sectors, will be "severely impacted" by rupee depreciation due to large overseas debt and limited hedging.
Additionally, the depreciation, which has seen the rupee lose over 12.5% since April to reach historic lows against US dollar, will also push input costs, Crisil said in a note.
"Corporate India had forex debt outstanding of over $200 billion as of March 2013, of which close to 45% is short-term debt. Moreover, only half their forex exposure is hedged," Crisil Research president Mukesh Agarwal said.
He said the current spate of depreciation and increased volatility has reduced the benefits of borrowing in the low-interest environment overseas.
The rupee has been sliding since May 20, ever since an announcement by the US Federal Reserve that it may pull back its liquidity-infusing Government bond buys as the domestic employment situation improves. The rupee touched a lifetime low of Rs 61.21 to a dollar earlier on Monday, forcing the central bank and capital markets regulator Sebi to announce steps to curb speculative trades in currency derivatives.
It gained during today's session and closed at 59.65 against the dollar -- second day of rise.
Automobiles, auto components, airlines, consumer durables, oil marketing companies, and fertilisers will be impacted the most by the rupee fall.
Export-oriented businesses like IT companies, pharmaceutical and ready-made garment exporters, crude oil producers and pure-play refineries may benefit.
However, the gains for export-oriented sectors are slated to be limited as clients will re-negotiate deals, it said.
"Demand growth and competitiveness, rather than currency movements, are more critical to determining growth and profitability," senior director Prasad Koparkar said.
The fuel cost increases will hurt the demand for small cars as fuel accounts for 25-30% of the ownership cost for a small car while airlines, especially the domestic ones who spend 70% of their operational costs on fuel, will also be hurt due to limited power to pass on the price escalation, it said.
For OMCs, Crisil revised its under-recoveries estimate up by 10% to Rs 1,05,000 crore for 2013-14, as diesel prices will not be increased by more than Rs 1.50 per litre.
Within the export-oriented sectors, Crisil said it expects the pre-tax margins of top IT companies to expand by up to 1% on a pick up in business momentum and utilisation levels.
