Singapore, Sep 19 International rating agency Fitch Ratings on Monday said Indian Oil Corporation's (IOC) financial profile would "remain stable" even though the state-run oil marketing company (OMC) planned to invest Rs 1,700-Rs 1,800 billion over the next six years.
The OMC on Thursday announced that it would invest Rs 1,700-1,800 billion over the next six years, including around Rs 150 billion in the current fiscal and around Rs 250 billion each in FY18 and FY19.
"Fitch has already factored in most of the capex over the next three years, and we see no significant change to our 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," the rating agency said, adding that it expected "IOC's financial profile to remain stable due to strong volume growth and relatively robust refining margins".
According to the rating agency, the oil marketing company's credit metrics is likely to weaken marginally but to remain within levels commensurate with its standalone profile over the medium term.
Fitch equalises IOC's ratings with that of its largest shareholder, the Indian state (BBB-/Stable) due to their strong operational and strategic linkages.
The agency has not factored in its investment along with the other state-owned oil-marketing companies -- Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited -- in the proposed refinery project in coastal Maharashtra.
Indo-Asian News Service