Bond credit rating company Moody’s Investors Service has said that the second wave of the COVID-19 pandemic will have varying effects on the country’s infrastructure firms.

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According to Moody’s, power companies and ports are expected to better endure the impact of disruptions caused by the pandemic as compared to airports and toll road operators.

India was shattered by the second wave of the global pandemic when the cases sharply spiked between February and May, leaving the health infrastructure overwhelmed and people struggling for oxygen and medicines which were short in supply.

As the Centre ruled out the imposition of yet another nationwide lockdown, different state governments imposed restrictions of different scales, including regional lockdowns, to curb the spread of the virus. The regional lockdowns led to a fall in the demand for electricity and transportation companies saw lower traffic volumes, while the availability of labour was not significantly affected.

Rated power companies follow a business model which allows them to manage the current contraction in demand and withstand a moderate extension of the cash conversion cycle. The reason is that these companies rely on state-owned distribution firms that are likely to be under financial stress due to lower demand.

Moody’s said in case the demand stays low for a longer period, and there is a subsequent cash squeeze, the power companies have good access to liquidity and support.

Moody’s said the second wave coupled with regional lockdowns will push back the recovery of Indian airports, which includes the ones which are undergoing debt-funded expansion plans. Owing to border closures, international travel is set to take even longer to recover.

Moody’s also said that extended restrictions on movements or renewed lockdowns will continue to have an adverse impact on toll road operators and put pressure on their credit quality.

As per Moody’s, despite the economic contraction due to the pandemic, India’s rated ports performed well last fiscal and succeeded in improving their market shares. They remained largely unaffected by the restrictions because “the movement of goods across the country has remained normal and both ports also have sufficient buffers in their financial profiles to absorb any temporary disruptions”.