Reliance gets thumbs-up from S&P, Fitch

Strong earnings support its growth aspirations and keep leverage in check

NEW DELHI: Reliance Industries Ltd has won a vote of confidence from global rating agencies S&P and Fitch after its robust earnings in the fiscal year ended March 31, 2024, supported its growth aspirations and kept leverage under check.

S&P Global Ratings and Fitch Ratings in separate notes spoke of its EBITDA (loosely known as pre-tax profit) rising in the current fiscal year and next on rising revenue and past investments.

"Reliance Industries Ltd's (RIL) strong earnings will keep leverage in check as the company continues to pursue growth ambitions. We expect the company's debt-to-EBITDA ratio to remain commensurate with the rating (BBB+/Stable/--)," S&P said in a note.

Separately, Fitch Ratings said RIL's EBITDA net leverage is likely to remain below 1x in the medium term, supported by increasing cash flows and lower capex intensity, even as the conglomerate's absolute capex and investments remain high in the near term. The oil-to-telecomand-retail conglomerate's growth aspirations remain intact, it said, adding the company has ramped up investments in the media business in recent months.

In 2024, it entered into binding definitive agreements with The Walt Disney Co for a media joint venture in which RIL will invest Rs 11,500 crore. The company subsequently agreed to buy Paramount Global's 13.01 per cent stake in local entertainment network Viacom18 Media Pte Ltd for about Rs 4,300 crore.

Also, the company received government approval in 2024 to develop gas reserves in the KG-D6 block in the Bay Of Bengal. This could increase the company's gas production capacity by 13-17 per cent. RIL's earlier announced investments include a Rs 75,000 crore expansion plan over five years (starting 2022) for the oil-to-chemicals business.

RIL's earlier announced investments include a Rs 75,000 crore expansion plan