Fitch Ratings affirmed Indiabulls Real Estate Ltd.'s long-term foreign-currency issuer default rating at B+, with a stable outlook.
The rating agency attributed the affirmation to the fall in the company's leverage to 58% in the first quarter of fiscal year 2018 from more than 60% in fiscal year 2017, resulting from the liquidation of a portion of the company's treasury stock.
The ratings action also reflects Fitch's expectation that the company's strategy to expand its investment-property portfolio will stabilize the company's cash flows. Fitch also anticipates Indiabulls' financial flexibility to remain good despite the implementation of India's Real Estate Regulation Act of 2016, which restricts property developers' ability to move cash freely out of construction projects, as many of the company's key cash-contributing projects are in advanced stages of construction.
The stable outlook reflects recovery in the company's contracted sales following India's move to demonetize its currency in 2016. Contracted sales reached 8.8 billion Indian rupees in the first quarter of fiscal-year 2018, compared with 2.6 billion rupees and 7.0 billion rupees in the third and fourth quarters of fiscal-year 2017, respectively.
As of Oct. 9, US$1 was equivalent to 65.44 Indian rupees.