Standard & Poor's (S&P) Ratings Services has upgraded its outlook on six Indian companies to stable from negative and affirmed the ratings following similar action on the sovereign credit rating on India (BBB-/Stable/A-3). These six companies are Reliance Industries, ONGC, Tata Consultancy Services (TCS), PowerGrid, NTPC and NHPC.

S&P has upgraded the outlook on Reliance to reflect the reduced likelihood that we may lower our transfer and convertibility (T&C) assessment following the sovereign action. 'We rate Reliance above the sovereign because of the company's large cash balance, the fact that most of the cash flows are linked to foreign currency, and our assessment that its stand-alone credit profile is 'bbb+'. At the same time, we believe the company continues to be exposed to the T&C risk of India, which we assess as 'BBB+', given that most of its operations are based in the country,' it said.

The global rating agency has revised the outlook on four government-related entities ONGC, PowerGrid, NTPC, and NHPC to reflect the sensitivity of these entities to the sovereign credit rating on India, given their very strong relationship to the government. 'We expect the government to maintain its majority ownership, and influence the business and financial strategy of the companies,' it said.

On TCS, S&P said, 'We revised the outlook on the foreign currency rating on TCS following similar action on the sovereign. The rating can be up to four notches higher than the foreign currency sovereign credit rating on India. TCS' global service-delivery capability, strong EBITDA margins, robust and stable cash flows, and net cash position enable the company to maintain positive liquidity under our hypothetical sovereign and T&C stress scenarios.'