Fitch upgrades Reliance industries’s long-term local currency IDR to BBB+

Mumbai: Fitch Ratings on Thursday upgraded the default long-term local-currency issuer default rating (IDR)  rating for the oil-to-telecom conglomerate Reliance Industries to "BBB+" from "BBB", with a stable outlook, based on expectations of an improvement in the company's financial profile with the help of The Latest record fundraising.

The rating agency also affirmed that the 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 raised from investors in Jio and another Rs 53,124.20 crore from a rights issue. In addition to the stake sale to BP in the petro-retail joint venture, the fund raised is in excess of Rs 1.75 lakh crore.

"The Local-Currency IDR upgrade is driven by our expectations to improve RIL's financial profile, with net debt reductions underpinned by gains from the sale of a stake 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 rating agency forecasts the company's net debt / EBITDA to drop 0.6 times in FY21 from 2.3 times in FY20, adding that 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 companies and consumer businesses, it added.

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

"Our expectations are 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.

Source: Economics Times