Fitch Ratings raises Reliance’s outlook to positive

Mumbai: Fitch Ratings on Friday revised outlook on Reliance Industries’ (RIL) long-term local-currency issuer default rating (IDR) to positive from stable and affirmed ratings at 'BBB', due to the potential to further deleverage its balance sheet.

At the same time, the ratings agency has affirmed the long-term foreign-currency IDR at 'BBB-' with a stable outlook, as RIL's Foreign-Currency IDR is capped by India's country ceiling of 'BBB-'.

“The outlook on the local-currency IDR was revised to positive due to the potential for RIL to further deleverage following its announcement that it will eliminate its net debt by the financial year ending March 2021 (FY21) and that it plans to sell 20 per cent stake in its oil-to-chemical division to Saudi Arabian Oil Company,” Fitch said in a release.


“We forecast its adjusted net debt/Ebitdar to reach 1.5 times over the next 18 to 24 months,” it added.

Fitch also said the affirmation reflect RIL's strong business profile - a large-scale refinery with a capacity of around 1.2 million barrels a day and asset quality that enables it to consistently deliver a gross refining margin (GRM) above regional benchmarks.

RIL also benefits from its vertically integrated business model and dominant market position in petrochemicals, which smooths out profit volatility along the refining and petrochemical value chain, Fitch said, adding that the company has completed capex to increase its downstream integration, which has improved feedstock flexibility.