CRISIL has assigned its 'AAA/Stable' rating to Rural Electrification Corporation's (REC's) Rs 320 billion long-term borrowing programme, while reaffirming the ratings on the company's other debt programmes at 'AAA/Stable/A1+'.

The ratings continue to reflect REC's strategic importance to, and majority ownership by, the Government of India (GoI) because of REC's key role in financing the Indian power sector. The ratings also factor in REC's sound resource profile and comfortable capitalization and profitability.

These rating strengths are partially offset by the inherent vulnerability of REC's asset quality to the weak financial profiles of its main borrowers, the state power utilities (SPUs), and significant sectoral and customer concentration.

CRISIL believes that REC will continue to benefit from GoI's support, given REC's strategic role in the implementation of GoI's power sector initiatives and majority ownership in the company. Moreover, REC will maintain its healthy position in the infrastructure-financing segment along with comfortable capitalization and earnings. The outlook may be revised to 'Negative' if there is decline in REC's strategic importance to, or in the support it receives from, GoI. The outlook may also be revised to 'Negative' if there is a deterioration in REC's asset quality or profitability.

Shares of the company gained Rs 8.95, or 3.65%, to trade at Rs 254.05. The total volume of shares traded was 178,680 at the BSE (12.38 p.m., Tuesday).