OIL share buyback may weaken its financial profile, says Fitch outlook

OIL has announced plans to buy back 4.45 per cent of its shares at a total cost of Rs 1,090 crore.

Oil India Ltd's (OIL) proposed share buyback is likely to weaken its financial profile, as its net leverage may rise to about 2.5 times by the end of fiscal 2020, according to Fitch Ratings.

This rate is higher than the rating agency's previous expectation of 2.2x (times), shrinking the already-low headroom for OIL's 'BBB'-standalone credit profile as Fitch's current negative rating norms for net leverage is 2.5 times.

On November 21, OIL announced its plans to buy back 4.45 per cent of its shares at a total cost of Rs 1,090 crore. "This, in our view, will drive up OIL's net debt