"We believe there are material uncertainties related to execution because the project is in its initial phase currently, and hence it is unlikely to affect OIL's bb-plus standalone credit profile consequently its rating in the next 12 to 18 months," said Fitch on Wednesday.
It expects OIL's credit metrics to remain in line with its standalone credit profile until FY23 even if capex progresses in line with the company's plan.
NRL, which was acquired by OIL earlier this year, is implementing a Rs 22,500 crore project to triple its capacity to 9 million metric tonnes per annum (MMTPA) by the financial year ending March 2025 (FY25) from 3 MMTPA.
"We expect the execution risks for the expansion to be significantly higher compared to other Indian brownfield refinery expansions because of the remote location of the refinery, larger supporting infrastructure investments and NRL's limited record in large expansions," said Fitch.
Singapore, June 30
Fitch Ratings expects the rating headroom for Oil India Ltd (OIL) to reduce in the medium term as leverage will rise when it accelerates capex to expand capacity at Numaligarh Refinery Ltd (NRL).
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