The S&P Global has awarded BBB+ rating to the Reliance Industries for disciplined spending, asset monetisation, and resilient earnings.
The rating agency said it has affirmed the BBB+ rating to RIL because the company’s leverage is sure to improve and stabilise over the next 12-24 months.
The RIL’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) from its digital and retail segments has grown significantly during the last two years.
The earning rose from Rs 9,300 crore in March 31, 2018 to an estimated Rs 31,500 crore at the end of March 2020.
And bolstered with investments by Facebook, RIL’s earnings from the digital and retail segments will likely grow at a 15 per cent over the next three years, it said.
Facebook picked up a 9.99 percent stake in Jio Platforms Ltd, a subsidiary of Reliance Industries Ltd, at Rs 43,574 crore.
The Reliance Industries Lrd has now teamed up with Facebook to launch its JioMart e-commerce platform on WhatsApp application.
WhatsApp, which is owned by Facebook, has a subscriber base of 400 million users in India.
In addition to the Facebook investment, the RIL has investment proposals from different overseas investors.
It was reported that Reliance Industries Ltd in August 2019, received a non-binding letter of intent from Saudi Aramco (Aramco) for acquiring a 20 per cent stake in its oil-to-chemicals business.
The S&P said finalisation of the Aramco deal would be credit positive for RIL, provided the company largely uses the proceeds to lower its debt.
It expected RIL to continue to follow a prudent financial policy in the current volatile market, the rating agency said.
After a peak in RIL’s capital expenditure at Rs 93,600 crore in FY19, the company’s capital expenditure has come down to Rs 63,000 crore in FY20.
“We expect RIL to lower its investments over the next two years toward Rs 50,000 crore per year,” the S&P said.