Moody's Upgrades Reliance to Baa1 on Strong Balance Sheet and Diversified Businesses

Moody's Upgrades Reliance Industries to Baa1, Citing Strong Financial Discipline and Diversified Operations

Moody's Ratings has upgraded Reliance Industries Ltd to Baa1 from Baa2, reflecting the conglomerate's resilient credit profile, diversified operations, and strong financial discipline. The ratings agency cited Reliance's leading positions across oil-to-chemicals, digital services, and retail, as well as counter-cyclical business segments and significant international exposure, with more than one-third of revenue coming from exports.

Reliance's scale, diversified earnings streams, and limited dependence on government-linked revenues support its ability to generate stable earnings through economic cycles. The agency highlighted the company's strong liquidity position, with about USD 25 billion in cash and modest debt levels, alongside sustained cash-flow generation and strong access to domestic and international capital markets.

Under Moody's revised sovereign-linked ratings methodology, Reliance's rating was upgraded to Baa1 from Baa2, reflecting its fundamentally strong and resilient credit profile. The agency noted that Reliance was among the first Indian corporates to publicly commit to and achieve a net debt zero position, while maintaining conservative financial policies consistent with a higher rating level.

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However, Reliance's rating remains capped at two notches above India's sovereign rating of Baa3 because of its significant exposure to the domestic economy through its fast-growing telecom and retail businesses. Moody's assigned a stable outlook to Reliance, mirroring the outlook on India's sovereign rating and reflecting expectations that earnings growth across most business segments will keep credit metrics strong over the next one to two years.

The agency stated that an upgrade would depend on an improvement in India's sovereign rating, while maintaining key metrics including funds from operations-to-net debt above 25 per cent, net debt-to-EBITDA below 2.0 times, and EBITDA-to-interest coverage above 7.0 times. A downgrade could result from a sharp deterioration in operating performance, aggressive capital spending, large acquisitions, or shareholder payouts that materially increase borrowings.

| Comparison of Reliance Industries' Key Metrics | | --- | --- | | Funds from Operations-to-Net Debt | 25% | | Net Debt-to-EBITDA | < 2.0 times | | EBITDA-to-Interest Coverage | > 7.0 times |

Note: The table above provides a comparison of Reliance Industries' key metrics, as mentioned by Moody's.

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