Moody's Investors Service has affirmed Oil India Baa2 issuer and bond ratings. The outlook for the ratings is stable.

The rating actions follows Moody's revision of its assumptions for oil prices. Moody's expects the crude oil price will stay at current low level for longer period. Moody's current price assumption for Brent is USD 43 per barrel and USD 48 per barrel in 2016 and 2017 respectively.

Oil India's Baa2 rating is equivalent to its baa2 baseline credit assessment (BCA) .

"The affirmation of ratings on Oil India reflects the reduction in fuel subsidy burden that partly offsets the impact of low oil prices resulting in a much lower decline in net realized prices of oil for the companies. Oil India's net oil price realization was USD 46.2 per barrel in fiscal year ending March 2015 and will average USD 44 per barrel over the next 3 years, based on our oil price and fuel subsidy burden assumptions," said Vikas Halan, a Moody's vice president and Senior Credit Officer.

"In addition, Oil India will maintain strong credit metrics, which will remain within our tolerance for the current ratings. Oil India will maintain retain cash flow to net debt of 70% -80% over the next 3 years against our downgrade threshold of 60%," added Halan, who is also Moody's lead analyst for Oil India.

Oil India's liquidity is excellent with cash and cash equivalents of Rs 88 billion as of March 2015 and debt maturing over next 12 months of Rs 4.6 billion.

The rating outlook is stable reflecting Moody's expectation a) that the fuel subsidy burden on OIL will remain low, b) the company will lower shareholder payments in line with reduction in its net profits and c) that the company's growth plan will continue to be executed within the tolerance level of its current ratings.

Shares of the company gained Rs 11.5, or 3.15%, to trade at Rs 376.25. The total volume of shares traded was 77,295 at the BSE (3.43 p.m., Wednesday).