The Indian corporate sector is expected to log the strongest profit growth in 2017 on the foundation of sustained economic growth, capacity additions and higher commodity prices, said global credit rating agency Moody's Investors Service.

The rating agency also said the credit quality of Asian (excluding Japan) non-financial corporates that it rates will remain stable in 2017, supported by steady macro conditions, a recovery of commodity prices and adequate market liquidity.

As to Indian corporates, Moody's said the gross domestic product (GDP) was expected to grow at 7.5 per cent, the commissioning of new production capacities, stable commodity prices would support EBITDA growth of 6-12 per cent over the next 12-18 months.

Moody's said corporate borrowings would slow down on the back of project completions or nearing completion, and the refinancing needs would also become easy owing to better cash balances and access to funds.

According to Moody's, the upside for Indian corporate sector was the implementation of the Goods and Services Tax (GST), structural reforms and improvement in commodity prices.

An improvement in valuation of assets would provide de-leveraging opportunity to corporates.

However on the downside, Moody's said that GDP growth falling below 6 per cent, increased competition, large debt-funded acquisitions or capacity additions, higher interest rates due to inflation and exchange volatility may result in contracting profits and tight funding situation.

With inputs from IANS