Moody's rates Larsen & Toubro Baa2

Moody's Investors Service said it assigned a Baa2 issuer rating to Larsen & Toubro Ltd. (L&T).

The outlook is stable.

The rating reflects L&T's position as one of India's leading engineering and construction companies as well as its status as one of Asia's largest vertically integrated engineering and construction conglomerates, Moody's said.

The rating is constrained by the rapid growth the company is expected to undergo in the medium term, which incorporates a large capital expansion program and resulting rise in debt levels, the agency said. The rating also incorporates the inherent cyclicality of the construction sector and the potential for margin pressure as competition intensifies in key markets, particularly from foreign competitors, Moody's added.

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