MUMBAI (Commodity Online): Reliance Industries Ltd (BSE: RIL : 500325, NSE: RELIANCE) credit rating remains unaffected by the company's plan to buy back equity shares.
Standard & Poor's, a part of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of credit ratings has rated Reliance Industries Ltd. (RIL; BBB/Positive/--).
According to the officials of Standard & Poor's, the RIL's liquidity will remain strong despite the buyback, considering the company's significant cash and cash equivalent of Indian rupee (INR) 745 billion as of Dec. 31, 2011.
The buyback plan could result in a maximum cash outflow of INR104 billion. Our rating on RIL already factors in a likely volatility in operating performance due to the cyclical nature of the refining and petrochemical sectors and the challenges at the company's KG D6 block, where gas production is declining.
Also the rating agency believes that the RIL's financial performance will remain strong in the next 12 months, with the ratio of adjusted debt to EBITDA at less than 1.5x.
In BSE, stocks of Reliance Industries Ltd traded down 2.82% to Rs 771 on Monday, 23rd January.
