Fitch upgrades RIL’s long-term local currency IDR to BBB+; outlook stable

Mumbai: Fitch Ratings on Thursday upgraded oil-to-telecom conglomerate Reliance Industries’ (RIL) long-term local-currency issuer default rating (IDR) to 'BBB+' from 'BBB', with a stable outlook, on the back of expectations of an improvement in the company’s financial profile helped by the recent record fundraising.

The ratings agency also affirmed RIL's long-term foreign-currency IDR at 'BBB-' with a stable outlook.

Recently, RIL raised more than Rs 1,68,818 crore in just 58 days through Rs 1,15,693.95 crore collected from investors in Jio and another Rs 53,124.20 crore from a rights issue. Along with the stake sale to BP in the petro-retail joint venture, the total fund raised is in excess of Rs 1.75 lakh crore.


“The upgrade of the Local-Currency IDR is driven by our expectations of an improvement in RIL's financial profile, with net debt reductions underpinned by proceeds from a stake sale in its subsidiary, Jio Platforms Limited, and a rights issue, and our forecast of positive free cash flow (FCF) during the financial year ending March 2021 (FY21),” Fitch said in a release.

The ratings agency forecasts that the company’s net debt/EBITDA will fall to 0.6 times in FY21 from 2.3 times in FY20. RIL's Local-Currency IDR also reflects its strong business profile with a market leading position and diversified cash flows from a mix of oil to chemical and consumer businesses, it added.

Fitch said it has kept the stable outlook on RIL's foreign-currency IDR, despite the revision in the Indian sovereign's rating outlook to negative from stable, as the ratings agency expects the company’s hard currency (HC) external debt-service ratio to improve over the next 12 months.

“Our expectation is driven by RIL's ability to reduce its foreign-currency borrowings outside India from the proceeds of the stake sale in Jio Platforms and its rights issue,” Fitch added.