S&P Upgrades Outlook for

RELIANCE

S&P Global Ratings has indicated that

(RIL) is a candidate for a rating upgrade, citing a strategic shift towards more stable, domestic-focused businesses. Shift in Earnings Mix: S&P projects that the share of earnings from RIL’s digital services and retail businesses will increase to approximately 60% by the end of fiscal 2026, up from about 45% in fiscal 2022. This shift is expected to provide more predictable performance, offsetting the volatility of its cyclical oil and gas-related businesses. Financial Projections: The report forecasts RIL's overall earnings to grow by 6-8% to ₹1.8 lakh crore in fiscal 2026. The company’s debt-to-EBITDA ratio is expected to remain stable at 1.5x-1.7x, a level considered healthy for its growth ambitions. Strong Q1 FY26 Performance: RIL's Q1 EBITDA of ₹58,000 crore surpassed S&P's expectations. This performance was driven by strong growth in Reliance Jio, resilient earnings from the oil-to-chemicals (O2C) segment, and a one-time gain of ₹8,900 crore from the sale of a minority stake in Asian Paints. Segment-Specific Outlook: O2C: Despite global volatility, the O2C segment's earnings are expected to remain resilient, with a projected modest decline of only 3-5% this fiscal year, significantly outperforming other Asian refining companies. Reliance Jio: The digital services unit's EBITDA is projected to rise by 15-17% in fiscal 2026, boosted by the full-year impact of recent mobile tariff hikes and a growing subscriber base. Capital Expenditure and Headroom: RIL is expected to generate ₹1.3-1.4 lakh crore in annual operating cash flows, which are projected to largely fund its capital expenditure of ₹1.4 lakh crore over the next two years. S&P believes the company has adequate financial headroom to support its growth plans.