S&P Global : Reliance Industries Ltd. Rating Raised To 'A-'
4th December 2025
S&P Global Ratings has raised its long-term issuer credit rating on Reliance Industries, as well as long-term issue ratings on the senior unsecured debt the company issued to 'A-' from 'BBB+
Key Highlights
Reliance Industries Ltd. 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.
S&P Global raised its long-term issuer credit rating on Reliance Industries to 'A-' from 'BBB+'. At the same time, S&P Global raised its long-term issue ratings on the senior unsecured debt the company issued to 'A-' from 'BBB+'.
The stable rating outlook reflects S&P Global's 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.
Rating Upgrade Rationale
S&P Global has said:
An expansion of more stable consumer businesses will improve the earnings and cash flow stability of Reliance Industries. Rising earnings from the digital service segment will reduce the group's exposure to the volatile hydrocarbon industry. We forecast digital services and the retail business will contribute to about 60% of operating cash flow in fiscal 2026 (year ending March 31, 2026). The oil-to-chemicals (O2C) and oil and gas segments will account for the remaining 40%.
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%-6% over the next 12-24 months, supported by customer churns 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. The company led industry-wide tariff hikes in India twice in the past.
Consolidated EBITDA for Reliance Industries could expand by 12%-14% to Indian rupee (INR) 1.85 trillion-INR1.95 trillion in fiscal 2026. We project digital services and JioStar will contribute about INR800 billion or 43%. The retail segment could contribute another INR270 billion or 14%.
"We forecast energy-related earnings will be stable at INR 750 billion-INR 800 billion". Reliance Industries has been able to keep such earnings fairly stable across volatile industry cycles, demonstrating its resilience.
Earnings growth could outpace high capital expenditure (capex) over the next 12-24 months. Our base case assumes the group will have a ratio of adjusted debt to EBITDA of 1.5x-1.6x through fiscal 2027, slightly down from 1.7x in the past two years. Higher earnings contributions from more stable consumer businesses will reduce earnings volatility, which will support leverage predictability.
Capex could remain at about INR 1.4 trillion through fiscal 2027, versus peak cash capex outflow of INR 1.5 trillion in fiscal 2024. We expect continued positive free operating cash flow across the group's key businesses amid O2C expansion, further deployment and expansion of its 5G network, and further retail store rollout.
The group will likely allocate more capital to renewable energy businesses, which have yet to contribute to earnings. These businesses could contribute significantly over the next five years, especially when spending on O2C, digital services, and retail gradually moderates.
Reliance Industries’ financial policy supports the 'A-' rating. The company will prudently manage spending within operating cash flow, in our view. It will likely adhere to its internal leverage target, even as it invests in the capital-intensive renewable energy segment.
Reliance Industries has made known a financial leverage target of a net debt-to-EBITDA ratio of below 1x, excluding spectrum liabilities for digital services. The company had a ratio of 0.59x as of Sept. 30, 2025. We estimate its leverage target maps to our S&P Global Ratings adjusted ratio of debt to EBITDA of about 2x.
Reliance Industries has a track record of monetizing assets to pare down debt following periods of high investments. For example, the company raised INR2.1 trillion or about US$29 billion in fiscal 2021, which reduced its leverage to 1.6x in fiscal 2021 from 3.1x in fiscal 2020. Plans to list Reliance Jio could further diversify the group's fund-raising avenues.
"We currently do not adjust Reliance Jio’s master service agreement with Tower Company in our debt calculations". In our estimation, the group could have a marginally higher ratio of adjusted debt to EBITDA if we treated these contracted lease payments as debt-like. We also estimate that Reliance Industries’ ratio of adjusted debt to EBITDA would remain at levels commensurate with the 'A-' rating.
The company has a 30-year master service agreement to use the passive tower infrastructure assets of Tower Company. We believe such tower assets play an integral role in Jio’s ability to operate and maintain its market position in India. The tower business owned by Tower Company was carved out of Jio and constitutes the majority of the towers that Jio leases.
"Our rating on Reliance Industries is two notches above the sovereign rating on India". We continue to rate the company above the sovereign. This is on account of its strong balance sheet and exposure to U.S. dollar revenue from its energy-related businesses. Such factors enhance the group's ability to withstand liquidity stress in a hypothetical scenario of sovereign stress.
"Our assessment of India’s transfer and convertibility risk constrains any upside for the foreign currency rating on Reliance Industries". The company has significant exposure to India as a jurisdiction, where most of its operating assets are located. The transfer and convertibility risk reflects our view of the likelihood of the sovereign restricting non-sovereign access to the foreign exchange that a non-sovereign entity needs to satisfy its debt-service obligations.
The stable rating outlook reflects our expectation that Reliance Industries will maintain its strong market position in its key businesses and expand its cash flow despite heavy capex. We estimate an adjusted ratio of debt to EBITDA of below 2x over the next 12-24 months.
Downside rating pressure could arise if Reliance Industries deviates from its financial policy and undertakes aggressive debt-funded investments without earnings accretion. We could also lower the rating if we forecast the company’s earnings and cash flows will materially weaken below our expectations, such that its debt-to-EBITDA ratio deteriorates to well above 2x with no pathway to a recovery.
"We could also lower the foreign currency rating on Reliance Industries if we lower our 'A-' transfer and convertibility assessment for India". This could happen if we lowered the sovereign ratings on India.
"We view an upgrade of the foreign currency rating as unlikely, unless the stand-alone credit profile (SACP) of Reliance Industries improves and the transfer and convertibility assessment for India rises above 'A-'."
"We could revise the local currency rating or our assessment of the SACP if Reliance Industries further strengthens its business scale and diversity while adhering to a more conservative financial policy across business cycles, such that its debt-to-EBITDA improves to and remains below 1.5x. Under such a scenario, we would expect the company’s new energy segment to contribute meaningfully to the overall strength of the group’s cash flow"