Latest news with #ICRA
Time of India
42 minutes ago
- Business
- Time of India
Indian aviation set to grow by 10% by FY2026, but financial losses likely to persist: ICRA report
Representative image India's aviation sector is projected to continue growing in FY2026, with domestic air passenger traffic expected to rise by 7–10% year-on-year, reaching between 175 and 181 million passengers, according to a report by ICRA. This projection follows a 7.6% increase in FY2025, when domestic traffic touched 165.4 million, marking a strong recovery at 16.8% above pre-pandemic levels recorded in FY2020. However, despite the steady growth in passenger numbers, the industry is likely to remain in the red. ICRA estimates a net loss of Rs 20,000–30,000 crore in FY2026, in line with the losses expected for FY2025. This is a sharp contrast to the Rs 1,600 crore net profit posted in FY2024, said ANI citing the report. According to the report, continued financial strain is being driven by elevated operating costs, including high aviation turbine fuel (ATF) prices and increasing lease obligations tied to new aircraft acquisitions. While the interest coverage ratio—a measure of a company's ability to meet interest payments—is forecast to improve to between 1.5 and 2.0 times, it still reflects a cautious outlook. On the international front, Indian airlines are also projected to see strong growth. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 2 BHK homes starting at ₹ 72.6 Lakh at Mahindra Happinest Tathawade . Mahindra Happinest Tathawade Get Quote Undo International passenger traffic is expected to increase by 15–20% in FY2026. In FY2025, Indian carriers flew 33.86 million international passengers, a 14.1% rise over the previous year and nearly 49% higher than the FY2020 figure. Recent monthly data supports this growth trend. Domestic air travel in May 2025 was estimated at 14.36 million passengers, representing a 4.1% increase over May 2024. However, traffic remained largely stable compared to April 2025. Airlines also expanded capacity by 5.1% year-on-year during the month. Despite positive trends in traffic and capacity, ICRA cautioned that profitability will remain under pressure. Persistent high fixed costs, elevated fuel prices, and increased interest expenses from aircraft leasing are expected to weigh heavily on financial performance. Additionally, carriers may face pressure on yields as they work to sustain high passenger load factors amid rising operating costs. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
8 hours ago
- Business
- Time of India
Crude oil price rise to increase import bill by $13–14 bn, widen CAD by 0.3% of GDP: ICRA
New Delhi: A $10 per barrel increase in average crude oil prices could raise India's net oil imports by $13–14 billion and widen the current account deficit (CAD) by 0.3 per cent of GDP, rating agency ICRA said in a report. The agency said that following the June 13 conflict escalation between Israel and Iran, crude prices rose sharply from $64–65 per barrel to $74–75 per barrel, raising concerns for crude- and gas-importing countries like India. India sources 45–50 per cent of its crude oil and nearly 54 per cent of its liquefied natural gas (LNG) from West Asia via the Strait of Hormuz (SoH). ICRA said that geopolitical tensions in the region have increased the risk to global energy trade, with any disruption at SoH potentially impacting about 20 per cent of global oil and 25 per cent of global LNG supplies. The agency has projected Brent crude oil prices to average $70–80 per barrel in FY26, with net oil imports expected at around $120 billion, compared with $123.4 billion in FY25. ICRA estimates the CAD to widen to $50–52 billion or 1.2–1.3 per cent of GDP in FY26, from 0.9 per cent in FY25. Marketing margins of oil marketing companies (OMCs) for petrol and diesel are likely to moderate to Rs 6–8 per litre in FY26 due to higher crude prices. Under-recoveries on subsidised liquefied petroleum gas (LPG) may increase to Rs 160 billion. While upstream companies may not see an immediate impact on their earnings at current crude prices, a prolonged surge could affect private investment and macroeconomic stability. ICRA also noted that natural gas prices are likely to rise in the upcoming reset in July 2025. The agency expects the Administered Pricing Mechanism (APM) gas price to revert to USD 6.75 per mmBtu from USD 6.5 per mmBtu. New well gas (NWG) prices are also estimated to increase by 10 per cent. India imports over 20 per cent of its global LNG from Qatar and UAE, with 85 per cent of their LNG exports passing through the SoH. Any extended disruption to shipping lanes could impact LNG supply and pricing in the domestic market. Gas-based power plants, currently operating at plant load factors of less than 20 per cent, are unlikely to see major changes unless domestic gas availability improves. Fertiliser companies may witness higher input costs and elevated subsidy needs, particularly for urea and ammonia. The report said that city gas distribution (CGD) companies and industrial consumers may also face higher spot LNG costs and shipping rates. ICRA further estimates that a 10 per cent increase in crude oil prices could lead to an 80–100 basis points increase in wholesale price index (WPI) inflation and a 20–30 basis points increase in consumer price index (CPI) inflation, depending on how much of the increase is passed on to end-users. India's GDP growth forecast of 6.2 per cent for FY26 could also be revised downward if crude oil prices remain elevated. The Reserve Bank of India's (RBI) April 2024 Monetary Policy Report estimated that a 10 per cent rise in crude oil prices over a baseline of USD 70 per barrel could reduce GDP growth by 15 basis points. ICRA said any extended disruption or closure of the SoH could impact India's LNG import availability and cost, increase domestic gas prices, and alter energy sector trade flows.
Time of India
9 hours ago
- Business
- Time of India
Crude oil price rise to increase import bill by $13–14 bn, widen CAD by 0.3% of GDP: ICRA
New Delhi: A $10 per barrel increase in average crude oil prices could raise India's net oil imports by $13–14 billion and widen the current account deficit (CAD) by 0.3 per cent of GDP, rating agency ICRA said in a report. The agency said that following the June 13 conflict escalation between Israel and Iran, crude prices rose sharply from $64–65 per barrel to $74–75 per barrel, raising concerns for crude- and gas-importing countries like India. India sources 45–50 per cent of its crude oil and nearly 54 per cent of its liquefied natural gas (LNG) from West Asia via the Strait of Hormuz (SoH). ICRA said that geopolitical tensions in the region have increased the risk to global energy trade, with any disruption at SoH potentially impacting about 20 per cent of global oil and 25 per cent of global LNG supplies. The agency has projected Brent crude oil prices to average $70–80 per barrel in FY26, with net oil imports expected at around $120 billion, compared with $123.4 billion in FY25. ICRA estimates the CAD to widen to $50–52 billion or 1.2–1.3 per cent of GDP in FY26, from 0.9 per cent in FY25. Marketing margins of oil marketing companies (OMCs) for petrol and diesel are likely to moderate to Rs 6–8 per litre in FY26 due to higher crude prices. Under-recoveries on subsidised liquefied petroleum gas (LPG) may increase to Rs 160 billion. While upstream companies may not see an immediate impact on their earnings at current crude prices, a prolonged surge could affect private investment and macroeconomic stability. ICRA also noted that natural gas prices are likely to rise in the upcoming reset in July 2025. The agency expects the Administered Pricing Mechanism (APM) gas price to revert to USD 6.75 per mmBtu from USD 6.5 per mmBtu. New well gas (NWG) prices are also estimated to increase by 10 per cent. India imports over 20 per cent of its global LNG from Qatar and UAE, with 85 per cent of their LNG exports passing through the SoH. Any extended disruption to shipping lanes could impact LNG supply and pricing in the domestic market. Gas-based power plants, currently operating at plant load factors of less than 20 per cent, are unlikely to see major changes unless domestic gas availability improves. Fertiliser companies may witness higher input costs and elevated subsidy needs, particularly for urea and ammonia. The report said that city gas distribution (CGD) companies and industrial consumers may also face higher spot LNG costs and shipping rates. ICRA further estimates that a 10 per cent increase in crude oil prices could lead to an 80–100 basis points increase in wholesale price index (WPI) inflation and a 20–30 basis points increase in consumer price index (CPI) inflation, depending on how much of the increase is passed on to end-users. India's GDP growth forecast of 6.2 per cent for FY26 could also be revised downward if crude oil prices remain elevated. The Reserve Bank of India's (RBI) April 2024 Monetary Policy Report estimated that a 10 per cent rise in crude oil prices over a baseline of USD 70 per barrel could reduce GDP growth by 15 basis points. ICRA said any extended disruption or closure of the SoH could impact India's LNG import availability and cost, increase domestic gas prices, and alter energy sector trade flows.
Time of India
17 hours ago
- Business
- Time of India
icra: 4 reasons why crude oil is not likely to sustain $80/bbl. How is India impacted?
Here are 4 reasons why Brent may sustain $80 per bbl: 1) Iran's Strait of Hormuz gamble too costly to close ADVERTISEMENT 2) OPEC production 3) US Shale factor ADVERTISEMENT 4) Global oil demand growth projections ADVERTISEMENT Impact on India While the Israel-Iran tension has kept crude oil on the boil with an 8% jump in the past eight days and 23% over a month, the black gold is unlikely to breach the $80 per barrel mark, according to estimates by a couple of brokerages."While the Iran–Israel conflict is serious and merits close monitoring, we reckon Brent Oil price is unlikely to sustain above US$80/bbl in a durable way unless the Strait of Hormuz is closed, or critical Gulf infrastructure is targeted," Yes Securities said in a note. ICRA too expects crude prices to average between $70-80/bbl for persistent geopolitical tensions and repeated threats, ranging from the Iran–Iraq War to post-Iran Nuclear deal fallout, Iran has never acted on its threat to close the Strait of Securities calls this restraint strategic and economic. The Strait handles nearly 20% of global oil consumption and is vital for Qatar's LNG exports, Iran's own trade, and the energy trade of regional allies like Iraq. A full closure would not only trigger military retaliation, particularly from the US, but also damage Iran's economic interests and international standing, this brokerage has wielded the threat of disruption as a geopolitical bargaining tool, without crossing the line into direct confrontation, Yes OPEC holding spare capacity of 4mbpd—well above Iran's 1.5mbpd exports—and a projected global market surplus of 0.9mbpd before the Israel-Iran flare-up, there is ample supply believes that even if Iranian supplies of 1.5mbpd are taken out, OPEC's spare production capacity of 4mbpd is good enough to compensate for the 2008, the rise of US shale has added millions of barrels per day to global supply, increasing flexibility and price elasticity. This has allowed the market to absorb geopolitical shocks more effectively, with tensions involving Iran, Libya, or Venezuela causing only short-lived price spikes."OPEC's diminished market share and increased spare capacity, especially from Saudi Arabia and the UAE, have further capped volatility, making oil prices more range-bound and positioning US shale as a soft ceiling on prices," Yes Securities which is the second largest consumer of oil, has seen a subdued demand post-COVID due to economic rebalancing and a weak real estate sector, Yes Securities said. Long-term energy transition trends such as the rise of electric vehicles, improved fuel efficiency, and supportive green energy transition policies are further restraining demand growth in OECD countries."This softened outlook is mirrored in recent agency forecasts. The International Energy Agency now expects global oil demand to grow by about 0.72mbpd in 2025, down from the earlier estimate of 1mbpd. EIA now projects global oil consumption to rise by 0.8mbpd in 2025, down from the earlier projection of 1mbpd," Yes to ICRA, crude oil imports from Iraq, Saudi Arabia, Kuwait and the UAE that pass through the Strait of Hormuz (SoH) account for 45-50% of total crude imports by India. Moreover, about 60% of the natural gas imports by India pass through the SoH.A $10/bbl increase in the average price of crude oil for the fiscal year will typically push up net oil imports by $13-14 billion during the these elevated crude oil prices, while the profitability of upstream players will remain healthy and their capex plans will remain intact, the marketing margins of downstream players will be impacted, along with the expansion of LPG under-recoveries.
Indian Express
19 hours ago
- Business
- Indian Express
War risks, rising oil prices push rupee down to 3-month low of 86.73
Amid the escalating Israel-Iran conflict and the rise in crude oil prices, the rupee extended its decline for the third consecutive day, shedding another 26 paise against the US dollar to close at 86.73 levels, marking its lowest close in the last three months. As the Middle East conflict is likely to worsen, the rupee is set to fall below the 87 level in the coming days unless the Reserve Bank of India intervenes in the market and prevents further decline, analysts said. The decline was primarily driven by persistent geopolitical uncertainty and a hawkish stance from the US Federal Reserve, making the dollar more attractive. Brent crude oil futures rose above $77 per barrel on Thursday, climbing to an over four-month high, driven by elevated geopolitical risks. Reports indicated that Israel attacked Iran's Arak heavy water reactor early Thursday, following Israeli President Isaac Herzog's statement about dismantling Iran's nuclear program. The prevailing risk-averse market sentiment and dollar demand from importers, fuelled by ongoing geopolitical uncertainties, has pulled down the rupee value, analysts said. Moreover, muted domestic equity markets and rising geopolitical tensions in the Middle East also pressurised the rupee, they added. Jateen Trivedi, research analyst, LKP Securities, said the rupee traded weak as rising crude oil prices and escalating Middle East tensions, including renewed US pressure on Iran's nuclear programme, weighed on sentiment. 'Additionally, the US Fed's indication that rate cuts may be delayed by around six months supported the dollar, adding pressure on the rupee. The expected trading range for the rupee is seen between 86.25 and 87.25,' he said. Rating agency ICRA said any escalation in the conflict in the area could significantly impact global supplies and prices. An increase in crude oil and gas prices will be positive for the profitability of upstream companies even as marketing margins of downstream players are adversely impacted. 'Iran's crude oil production is around 3.3 mbd, of which it exports 1.8-2.0 mbd. While Iranian oil and gas facilities have reportedly been attacked, the extent of damage is not clear. However, any disruption of Iranian production and supplies or a wider regional conflict impacting other large producers in the region could push energy prices higher,' it said. Crude oil imports from Iraq, Saudi Arabia, Kuwait and the UAE that pass through the Strait of Hormuz (SoH) account for 45-50 per cent of total crude imports by India. About 60 per cent of the natural gas imports by India pass through SoH. At these elevated crude oil prices, while the profitability of upstream players will remain healthy and their capex plans will remain intact, the marketing margins of downstream players will be impacted along with the expansion of LPG under-recoveries, ICRA said.
