Shares of Reliance Industries Ltd. rose in trade as S&P Global Ratings maintained a stable outlook with a 'BBB+' rating on the company.
RIL's operating performance is likely to remain resilient over the next two years, according to S&P Global. Its growing presence in the digital and retail segments will temper softer earnings in the energy business, it said.
The rating agency could lower its outlook if its capital expenditure, including acquisitions in digital or retail businesses, is higher than it expects. "We believe RIL's expansion plans for the period are manageable."
The capex will remain elevated but lower than the levels of fiscal 2023, it said. "We believe the company's leverage will remain at a level commensurate with the current rating."
S&P Global has also affirmed the 'BBB+' rating on the company's senior unsecured debt. Despite elevated investments over the next 24 months, the stable rating outlook indicates that the company's cash flows will help preserve its financial profile.
The agency plans on raising its outlook on the conglomerate if it demonstrates a track record of conservative financial policy, such as debt-to-Ebitda below 2 times. A higher rating could require the digital and retail segments' competitiveness to strengthen further.
Shares of Reliance Industries Ltd. gained 0.03% to Rs 2,470.65 apiece as of 2.23 pm in trade on Thursday, as compared with a 0.08% decline in the benchmark NSE Nifty 50.
The scrip gained 0.61% intraday. Total traded volume stood at 1.5 times its 30-day average. The relative strength index was 55.
Out of the 38 analysts tracking the company, 33 maintain a 'buy' rating, three recommend a 'hold,' and two suggest to 'sell' the stock, according to Bloomberg data.
The average calculated from the 12-month price target given by analysts implies a potential upside of 13.7%.
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