S&P, Fitch see earnings growth at RIL

Reliance Industries Ltd (RIL) has won a vote of confidence from global rating agencies S&P and Fitch after its robust earnings in the fiscal year ended March 31, 2024, supported its growth aspirations and kept leverage under check.

S&P Global Ratings and Fitch Ratings in separate notes spoke of its EBITDA (loosely known as pre-tax profit) rising in the current fiscal year and next on rising revenue and past investments.

“Reliance Industries Ltd’s (RIL) strong earnings will keep leverage in check as the company continues to pursue growth ambitions. We expect the company’s debt-to-EBITDA ratio to remain commensurate with the rating (BBB+/Stable/--),” S&P said in a note.

The oil-to-telecom-and-retail conglomerate’s growth aspirations remain intact, it said, adding the company has ramped up investments in the media business in recent months. In 2024, it entered into binding definitive agreements with The Walt Disney Co for a media joint venture, in which RIL will invest Rs11,500 crore. The company subsequently agreed to buy Paramount Global’s 13.01 per cent stake in local entertainment network Viacom18 Media Pte Ltd for about Rs4,300 crore.

“These investments are in line with RIL’s strategy to diversify and have a strong presence in a few key industries,” the rating agency said.

Also, the company received government approval in 2024 to develop gas reserves in the KG-D6 block in the Bay Of Bengal. This could increase the company’s gas production capacity by 13-17 per cent.