New Delhi [India], May 29 : Moody's Ratings has upgraded Reliance Industries Limited's (RIL) long-term local currency issuer rating and foreign currency senior unsecured ratings to Baa1 from Baa2 following an update to its methodology on how sovereign credit quality influences corporate ratings.
With the latest upgrade, Reliance Industries is now rated two notches above India's sovereign rating by both Moody's and S&P Global Ratings, reflecting the company's strong credit profile and diversified business operations.
In a statement, Moody's said the upgrade "reflects its fundamentally strong and resilient credit profile, supported by its large scale, diversified operations, and leading market positions across oil-to-chemicals, digital, and retail sectors."
The ratings agency said Reliance benefits from "counter-cyclical business segments, significant international exposure (with over one-third of revenues derived from exports), and limited reliance on government-linked revenues," which support its ability to generate stable earnings across business cycles.
The upgrade follows Moody's publication of its revised cross-sector methodology, Impact of Sovereign Credit Quality on Issuer Ratings, which changes how the agency assesses the extent to which companies can be rated above their home country's sovereign rating.
According to Moody's, Reliance's business characteristics are "consistent with entities that can be rated two notches above the sovereign under the revised methodology."
Highlighting the company's financial strength, Moody's said Reliance has "consistently demonstrated impeccable project execution and financial discipline, including being among the first Indian corporates to publicly commit to and achieve a net debt zero position, while maintaining conservative financial policies consistent with a higher rating level."
The agency also cited Reliance's strong liquidity profile, noting that the company has "around USD 25 billion of cash against modest debt," along with robust cash flow generation and strong access to domestic and international capital markets.
However, Moody's said the rating remains capped at two notches above India's Baa3 sovereign rating because of Reliance's significant linkages to the domestic economy through its retail and digital businesses.
"The rating remains capped at two notches above India's Baa3 sovereign rating, reflecting RIL's meaningful linkages to the domestic economy, particularly through its large and growing digital and retail businesses, which anchor its operations to India's macroeconomic and policy environment," the agency said.
Moody's maintained a stable outlook on Reliance's ratings, in line with the stable outlook on India's sovereign rating.
"The stable outlook also reflects our expectation that the company's earnings will continue to grow across most of its business segments, such that its credit metrics will remain solidly positioned for its ratings over the next 1-2 years," Moody's said.
The agency added that while Reliance's credit metrics are strong enough to support a higher unconstrained credit assessment, any further upgrade would depend on an upgrade of India's sovereign rating because the company's ratings are currently capped at two notches above the sovereign.
Separately, Moody's also upgraded ratings of Tata Consultancy Services, Infosys and Tata Steel following the methodology revision. TCS and Infosys were upgraded to A2 from Baa1, while Tata Steel's foreign currency issuer rating was raised to Baa2 from Baa3. The agency cited strong standalone credit profiles, global diversification and parent support factors behind the upgrades.