Fitch today affirmed highest grade to Mukesh Ambani-led Reliance Industries Ltd's long-term national rating on the back of the company's strong profile in the oil and gas segments.
It also accorded moderate ratings on RIL's long-term Foreign Currency and Local Currency issuer default rating, while revising upwards the outlook on the latter to positive from stable.
"Fitch Ratings has affirmed India-based RIL's long-term foreign currency issuer default rating at 'BBB-', long-term local currency IDR at 'BBB' and national long-term rating at 'AAA(ind)'," Fitch said in a statement.
"The ratings continue to reflect RIL's strong business profile in the oil and gas business with vertical diversification across the supply chain (upstream, refining and petrochemicals), its efficient refining operations and its dominant position in the Indian petrochemicals sector," Fitch said.
The 'AAA' national ratings denote the highest rating assigned by the agency and is assigned to issuers or obligations with the lowest expectation of default risk.
A 'BBB' denote a moderate default risk relative.
It added that the rating has also taken into account RIL's scale of operations in key product lines, its record of robust cash flow from operations and the company's strong liquidity position.
"The local currency IDR outlook revision reflects the likelihood of RIL's credit metrics strengthening further, subject to the closure of its proposed deal with BP Plc and no major investment being announced," Fitch said.
In February, RIL entered into an agreement to sell 30% stake in 23 oil and gas blocks to global energy giant BP for $7.2 billion.
The ratings agency said that in 2009-10, upstream, refining and petrochemicals contributed 27%, 30% and 43%, respectively, to RIL's EBIDTA.
"Fitch notes that most of RIL's upstream cash flows will come from the Krishna Godavari (KG D6) natural gas block in the next few years, which should be relatively stable given the regulated pricing," it said.
"As the largest private sector corporate in India, RIL has good access to external financing sources. It has a strong liquidity position with cash equivalents of around $7.1 billion at December-end, 2010, which will increase if the BP deal closes," Fitch added.
It further said that RIL has access to significant un-utilised working capital banking lines and treasury stock holdings.
