Indian Oil's investment plans not to affect credit profile: Fitch

NEW DELHI: State-owned Indian Oil Corporation's (IOC) Rs 1.8 lakh-crore capital investment plan over the next six years will not affect the company's credit profile, Fitch Ratings said today.

"The large investment plans announced by IOC are in line with the agency's expectations that are incorporated in the assessment of its standalone credit profile of 'BB+'. Fitch equalises IOC's rating with that of its largest shareholder, the state of India, due to their strong operational and strategic linkages," it said in a statement here.

IOC, on September 15, had said its capex would be Rs 1.7-1.8 lakh crore over the next six years, including around Rs 15,000 crore in the current fiscal and around Rs 25,000 crore each in 2017-18 and 2018-19.

Fitch said it has already factored in most of the capex over the next three years and sees no significant change to its current expectations as a result of this announcement.

"We continue to expect IOC's free cash flow to remain negative over the medium term due to the high capex," it said. "However, we still expect IOC's financial profile to remain stable due to strong volume growth and relatively robust refining margins."

The rating agency said it expects IOC's credit metrics to weaken marginally, but to remain within levels commensurate with its stand-alone profile over the medium term.

Indian Oil Corporation