S&P Global Ratings has said Reliance Industries Ltd's (RIL's) deleveraging of its balance sheet is likely to continue with the company's prudent investment policies, stable operations and potential for further asset monetisation supporting the trend.
RIL's deleveraging over the past 12 months was driven by sizable asset monetisation and equity raising. The conglomerate recognised a cash inflow of Rs 2.2 lakh crore during fiscal 2021 (year ended March 31) which lowered S&P's computation of reported net debt by about 70 pr cent to Rs 54,000 crore.
The reduction in debt was despite RIL having negative free cash flows of about Rs 86,000 crore during the year.
S&P said it cannot rule out further asset monetisation by RIL over the next 12 to 24 months. The company is in the process of spinning off its oil-to-chemicals segment into a wholly-owned subsidiary.
It has a non-binding letter of intent to sell a 20 per cent stake in the segment to Saudi Arabian Oil Company (Aramco). Further monetisation is possible in RIL's telecommunications and retail businesses. Moreover, S&P expects the company to receive about Rs 40,000 crore from a rights issue later this year.
S&P said sizable investments by RIL are a risk to its underlying view on the company. Nevertheless, it believes the RIL management remains committed in maintaining low levels of leverage.
"We view the company's track record of sound credit quality as critical when we revisit its financial profile. The ratings on RIL will likely remain at BBB-plus even if the company's credit metrics strengthen further, given India's transfer and convertibility assessment of bbb-plus."
S&P expects the digital and retail segments to continue to mitigate volatility in RIL's energy segment and underpin stable earnings.
( With inputs from ANI )
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