CRISIL assigns AAA/Stable ratings to L&T's Rs 1,000 cr NCD

Ratings also factor in infra projects by various SPVs

Ratings agency CRISIL has assigned AAA/Stable rating to the L&T's Rs 1,000-crore non-convertible debenture (NCD) issue. It has also reaffirmed the oustanding ratings on the company's debt programme and bank facilities at AAA/FAAA/Stable. The ratings continue to reflect L&T's dominant position in the engineering and construction (E&C) market in India, the company's diversified revenue profile, and strong financial flexibility, the ratings agency said.

Further, the ratings also factor in L&T's increasing exposure to risks related to large infrastructure developmental projects being undertaken by various special purpose vehicles (SPVs), primarily through the subsidiaries, L&T Infrastructure Development Projects Ltd (L&T IDPL), L&T Power Development Ltd (L&T PDL) and L&T Realty Ltd.

According to CRISIL, L&T is likely to maintain its healthy cash accruals despite the challenging market conditions for the E&C segment, and will continue with its diversified project-mix strategy to mitigate concentration risks and profitability pressures. However, it said the outlook may be revised to 'negative' if L&T's exposure to development projects weakens its capital structure.