CRISIL has assigned its 'AAA/Stable' rating to the Rs 10 billion non-convertible debenture (NCD) issue of Larsen and Toubro (L&T). It has reaffirmed the outstanding ratings on the company's debt programmes and bank facilities at 'AAA/FAAA/Stable/A1+'.

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 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 (L&T IDPL), L&T Power Development (L&T PDL) and L&T Realty.

CRISIL believes that L&T will maintain its leadership position in the E&C segment in India, and that the company is positioned to benefit from the large infrastructure spending in the country, over the medium term. Moreover, 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. The outlook may be revised to 'Negative' if L&T's exposure to development projects weakens its capital structure.

Shares of the company declined Rs 11.6, or 0.76%, to trade at Rs 1,520. The total volume of shares traded was 81,780 at the BSE (2.11 p.m., Wednesday).