Infrastructure finance non-bank companies (NBFC-IFCs) have remained largely resilient to the Covid-19 crisis. While growth of NBFC-IFCs moderated over the last two years, the asset quality indicators have improved and, with a higher provision coverage (64% as of March 31, 2021, the strongest level since March 2016), their solvency too has improved. Moderate growth and healthy internal accruals have led to a decline in leverage, giving the entities further headroom for growth in the medium term. Improved systemic liquidity and consequent softening of cost of borrowings has also supported the earnings profile. Thus, the outlook for the sector is ‘Stable’ despite a challenging operating environment.
