CRISIL has downgraded its rating on the long-term bank facilities of Bharat Heavy Electricals (BHEL) to 'AA+/Negative' from 'AAA/Negative'. However, the rating on the company's short-term bank facilities has been reaffirmed at 'A1+'.

The downgrade reflects CRISIL's belief that BHEL's business risk profile will remain constrained over the medium term by continued weak profitability and stretch in working capital cycle.

The rating agency believes BHEL's profitability will remain under pressure, and its working capital stretched over the medium term on account of the challenging operating environment in the power sector.

''The rating may be further downgraded if project execution is slower than expected and costs remain high, leading to continued losses and a high receivable position. Conversely, the outlook may be revised to 'stable' if profitability improves, backed by a structural revival in the power sector, translating into faster project execution, and improvement in working capital position,'' it said.

Shares of the company declined Rs 2.30, or 2.30%, to trade at Rs 105.35. The total volume of shares traded was 869,456 at the BSE (11.14 a.m., Thursday).