Fitch Rating is recognized universally as one amongst the big three credit rating system has rated Reliance Industries’ national long-term rating at “AAA” denoting its stable nature and marking its goods and services as the finest ones. Reliance Industries headed by Mukesh Ambani has attained this high ranking owing to its competency in achieving a sound liquidity position and produce healthy cash flow with its operations.
Fitch also announced that the Local currency IDR rating for this leading private organization was fixed to be at BBB that signifies moderate risk default. Also, the Long term foreign currency issuer default rating is announced to be BBB- based on the strength and stability. The IDR rating is generally calculated to generate conjectures and predictions regarding the company’s future.
The company’s marked success in varied upstream projects including its development in the petrochemical industries, the innovation at Jamnagar refining complex including its coke gasification facility and the growth it has been experiencing in the oil and gas industry have influenced this high grade rating.
The deal that Reliance signed with BP Plc has also influenced its growth highly with its cash reserves rising. Besides, it also enabled the company to dismiss concerns regarding credit due to any breakdown in production owing to declining cash generation. The apprehensive voices were increasingly overwhelming after Reliance experienced a slight plunge in the upstream earnings in the FY2012 due to the drop in the natural gas production at KGD6 block.
However, its US shale Gas JVs has high prospects of increasing the production for FY2013 and can further increase the value of RIL stocks. RIL has always been recognized as a reliable firm that will maintain a recommendable risk profile in the forthcoming years. With substantial financial sources backing it, the solid liquidity position and access to unused working capital in treasury stock holdings and banking lines can potentially work to its advantage.
Reliance Industries has been proficient in venturing in varied sectors and has enjoyed success in many of its key sector including petrochemical, oil and refinery etc. With the help of finest technology and refinery methods that it equips, it has been able to stay ahead of its competitors. Besides, there are further announcements regarding its expansion of business by venturing into the power sector. This AAA rating ensures investors about the low default risk that can be expected with their association with the company.