Has S&P Upgraded Reliance Industries’ Rating to 'A-'?
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Synopsis
S&P has significantly upgraded Reliance Industries' credit rating to 'A-', indicating a positive outlook driven by stable consumer business expansion. This move is expected to enhance the company's financial stability and growth potential in the competitive market.
Key Takeaways
- S&P Global Ratings upgraded RIL to 'A-'
- Expansion in stable consumer businesses is key
- Strong competitive position will enhance earnings
- Wireless subscriber growth expected 3% to 6%
- Projected EBITDA growth of 12% to 14%
New Delhi, Dec 4 (NationPress) S&P Global Ratings announced on Thursday that it has elevated Reliance Industries Ltd's (RIL) long-term issuer credit rating to 'A-' from 'BBB+'. This decision is attributed to the growth of more stable consumer segments, which are expected to enhance the company's earnings and cash flow stability.
The global rating agency highlighted that RIL is poised to boost cash flow from its less volatile consumer businesses, leading to improved earnings quality.
According to the agency, 'The company's robust competitive position across various sectors will further enhance earnings and cash flow, facilitating significant investments in key areas.'
Additionally, 'We have also upgraded our long-term issue ratings on the company’s senior unsecured debt to 'A-' from 'BBB+'.'
The stable outlook suggests that this India-based conglomerate will uphold its leading position in critical markets, with earnings expected to sufficiently cover capital expenditures over the next 12-24 months.
Moreover, Reliance Industries' stronghold in India's telecommunications sector is projected to continue driving its earnings and profitability.
It is anticipated that the company's wireless subscriber base could grow between 3% to 6% in the coming 12-24 months, aided by customer migration from competitors facing subscriber losses due to inadequate network investments.
Furthermore, the average revenue per user (ARPU) for its telecom subsidiary, Reliance Jio, is expected to rise due to subscriber upgrades to premium plans and increased data consumption in India, as noted by S&P.
The company has previously led two industry-wide tariff increases in India.
According to the report, consolidated EBITDA for Reliance Industries could see a growth of 12% to 14%, potentially reaching Rs 1.85 trillion to 1.95 trillion in the fiscal year 2026.
It is projected that digital services and JioStar will contribute approximately Rs 800 billion or 43%, while the retail segment could add another Rs 270 billion or 14%.
Point of View
I believe this upgrade from S&P reflects the resilience and strategic positioning of Reliance Industries in a competitive market. The company’s focus on stable consumer businesses is commendable, and it is vital for investors to keep an eye on how these developments will unfold in the coming months.
NationPress
05/12/2025
Frequently Asked Questions
What does the rating upgrade to 'A-' mean for Reliance Industries?
The upgrade to 'A-' indicates that S&P expects Reliance to maintain strong earnings and cash flow stability, making it a more attractive option for investors.
How will Reliance Industries achieve this cash flow stability?
Reliance plans to enhance cash flow through its less cyclical, consumer-facing businesses, which are expected to grow and improve earnings quality.
What is the expected growth in RIL's wireless subscribers?
S&P predicts that RIL's wireless subscriber growth could range from 3% to 6% over the next 12-24 months.
What impact will the ARPU increase have on revenues?
An increase in average revenue per user (ARPU) from upgrades to higher-priced plans is likely to boost revenues for Reliance Jio significantly.
What are the projected EBITDA figures for Reliance Industries?
Consolidated EBITDA is expected to grow by 12% to 14%, reaching between Rs 1.85 trillion to 1.95 trillion in fiscal 2026.
