Reliance stock backed by S&P rating affirmation

Reliance Industries received support for its credit profile on Nov. 3 after S&P Global Ratings affirmed its A- long-term issuer credit rating and kept the outlook stable. The agency linked the decision to resilient earnings, strong cash generation and the recent listing of digital services subsidiary Jio Platforms.

Growth expectations underpin rating

S&P expects Reliance Industries' oil-to-chemicals EBITDA to grow 30% to 35% in the fiscal year ending March 2027. The agency also projects 12% to 14% EBITDA growth in digital services, supported by subscriber expansion and higher average revenue per user at Reliance Jio Infocomm.

Consolidated EBITDA is forecast to increase 19% to 23% to INR 2.15 trillion to INR 2.25 trillion in fiscal 2027. S&P expects digital services and energy-related businesses to each contribute close to 45% of group EBITDA.

Leverage remains a watchpoint

The rating outlook reflects S&P's expectation that Reliance will maintain strong positions in its key sectors and expand cash flow while funding substantial capital expenditure. The agency estimates adjusted debt to EBITDA at 1.6 times to 1.8 times through fiscal 2028, even as capital expenditure could rise to INR 1.4 trillion to INR 1.5 trillion.

S&P said rating pressure could emerge if Reliance pursues aggressive debt-funded investment without corresponding earnings growth. A sustained deterioration in earnings and cash flow could also weigh on the rating if leverage rises materially above two times without a credible recovery path.

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Further developments can be found in more news and analyses on Reliance stock.