New Delhi: S&P Global Ratings has affirmed its 'A-' long-term issuer credit rating on Reliance Industries Ltd (RIL), citing resilient earnings, strong cash generation and improved funding flexibility following the listing of digital services subsidiary Jio Platforms Ltd. The outlook on the ratings remains stable.
The rating agency expects Reliance Industries to sustain above-industry growth in digital services while generating sufficient cash flow to fund elevated capital expenditure and investments in emerging businesses, including artificial intelligence-related infrastructure, data centres and renewable energy.
S&P projects RIL's consolidated EBITDA to grow 19-23 per cent to Rs 2.15 lakh crore-Rs 2.25 lakh crore in the financial year ending March 2027 (FY27), according to a statement by the rating agency.
The energy-related and digital services businesses are each expected to contribute close to 45 per cent of group EBITDA.
The oil-to-chemicals (O2C) business is expected to be a key earnings driver, with EBITDA projected to increase 30-35 per cent in FY27. The improvement is likely to be supported by higher integrated refining margins amid lower global crude processing and disruptions to crude oil flows from the Middle East.
S&P noted that crack spreads for gasoline, gasoil and aviation fuel had risen approximately threefold year-on-year in the quarter ended September 30, 2026. It expects RIL's O2C EBITDA per barrel to increase to about USD 18 in FY27, compared with nearly USD 14 in FY26.
The agency expects the company to sustain refining operations at healthy utilisation levels, supported by its complex refining infrastructure and ability to source crude from a wide range of suppliers.
Digital services EBITDA is forecast to grow 12-14 per cent, driven by subscriber additions, higher average revenue per user (ARPU) and the migration of customers to premium plans by Reliance Jio Infocomm Ltd amid rising data consumption. S&P's base-case projections do not factor in any further telecom tariff increases.
S&P said the listing of Jio Platforms would diversify the group's funding sources and improve its access to equity capital, particularly as investments in digital infrastructure are expected to increase.
The primary issuance of new shares in Jio Platforms raised about Rs 30,000 crore in fresh capital, equivalent to about 9 per cent of RIL's adjusted debt. The capital infusion is expected to be modestly credit positive, improving the group's adjusted debt-to-EBITDA ratio to approximately 1.6 times in FY27.
The rating agency expects RIL to maintain its financial discipline despite higher investment requirements. The company aims to keep its reported net debt-to-EBITDA ratio below 1.0 times, which S&P estimates translates into an adjusted debt-to-EBITDA ratio of approximately 2.0 times under its methodology.
S&P forecasts the adjusted ratio will remain between 1.6 and 1.8 times through FY28, supported by earnings growth, even as annual capital expenditure rises to Rs 1.4 lakh crore-Rs 1.5 lakh crore from approximately Rs 1 lakh crore in FY26.
The rating agency identified artificial intelligence infrastructure, data centres and new energy as important areas of RIL's future expansion. The company has announced investments in data centres as part of India's efforts to develop its AI ecosystem, as well as plans for a new refinery in the US.
However, S&P noted that the investment plans remain at a preliminary stage, although their eventual scale could be material.
The agency said it would assess the financial implications of joint ventures, including the proposed data centre investments through Digital Connexion, particularly their ownership structures, risk-sharing arrangements and potential financial obligations for RIL.
S&P said it could include joint-venture debt in its assessment of RIL's leverage if the company had an incentive to provide financial support to an associate or joint venture during periods of financial stress.
The stable outlook reflects S&P's expectation that RIL will maintain its strong market positions across key businesses, expand cash generation and manage elevated capital expenditure while keeping adjusted debt-to-EBITDA below 2 times over the next 12-24 months.
The agency said rating pressure could emerge if RIL departs from its financial policy and undertakes aggressive debt-funded investments without corresponding earnings growth. A sustained deterioration in earnings and cash flow, pushing adjusted debt-to-EBITDA materially above 2 times without a credible recovery path, could also lead to a downgrade.
An improvement in the rating would require stronger business scale and diversification alongside a more conservative financial policy across business cycles. S&P said an improvement in the company's stand-alone credit profile could be considered if its adjusted debt-to-EBITDA ratio falls to and remains below 1.5 times.
A meaningful contribution from the new energy business to the group's overall cash flow would also support such an improvement.
S&P added that an upgrade of RIL's foreign currency rating would also require an improvement in India's transfer and convertibility assessment, currently at 'A-'. The agency's ability to raise the foreign currency rating is therefore, linked to both the company's credit profile and the sovereign-related assessment.
The affirmation underscores S&P's assessment that RIL's earnings growth and diversified funding sources provide a buffer against its substantial investment programme, while leverage, capital allocation and the returns from new businesses remain important factors for its future credit profile.