New Delhi, Dec 4 S&P Global Ratings on Thursday raised Reliance Industries Ltd's (RIL) long-term issuer credit rating to 'A-' from 'BBB+', saying an expansion of more stable consumer businesses will improve the group's earnings and cash flow stability.
The global rating agency said that RIL will continue to increase cash flow from less cyclical consumer-facing businesses, which will improve its earnings quality.
"The company's good competitive position across its businesses will further drive earnings and cash flow, which should cover heavy investments in key businesses," it mentioned.
At the same time, "we raised our long-term issue ratings on the senior unsecured debt the company issued to 'A-' from 'BBB+'."
"The stable rating outlook reflects our view that the India-based conglomerate will maintain its leading market position in its key businesses, and its earnings will be sufficient to cover capital spending over the next 12-24 months," the note said.
It further stated that Reliance Industries' strong position in India’s telco industry will continue to power earnings and profitability.
The company's wireless subscribers could increase by 3 per cent to 6 per cent over the next 12-24 months, supported by customer churn from other players that are experiencing subscriber losses due to limited network investment.
Meanwhile, average revenue per user (ARPU) for telco subsidiary, Reliance Jio, could increase on subscribers' upgrades to higher-priced plans and higher data consumption in India, said S&P in its note.
The company led industry-wide tariff hikes in India twice in the past.
According to the note, consolidated EBITDA for Reliance Industries could expand by 12 per cent to 14 per cent to Rs 1.85 trillion to 1.95 trillion in fiscal 2026.
"We project digital services, and JioStar will contribute about Rs 800 billion or 43 per cent. The retail segment could contribute another Rs 270 billion or 14 per cent," it added.
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