Reliance Industries Ltd. makes a corporate announcement

The latest rationale discloses debt additions and consolidation treatment, but not a complete numerical bridge to the ratio. The reported CARE metric was net debt/PBILDT of 1.40x as of 31 March 2026—not explicitly a CRISIL Net Debt/EBITDA figure. CARE defines debt for this purpose as including deferred spectrum payments and lease liabilities. ^[1]

The specific treatments disclosed were:

• Lease liabilities included: Lease liabilities were treated as debt rather than excluded from leverage. ^[2]
• Deferred spectrum payments included: RJIL’s deferred payment obligations to the Department of Telecommunications for spectrum were treated as debt. ^[3]
• Certain off-balance-sheet contractual commitments capitalised: CRISIL capitalised the present value of part of RJIL’s long-term payments to Jio Digital Fibre and Summit Digitel, which own transferred fibre and tower assets. It applied a similar treatment to contractual obligations to Pipeline Infrastructure Limited. ^[3]
• Strategic associates fully consolidated: CRISIL fully combined Jamnagar Utilities & Power and Sikka Ports & Terminals because of their strategic importance and operational linkages with RIL’s O2C operations. ^[3]
• Cash equivalents: The rationale does not provide a separate schedule specifying which cash, cash-equivalent or liquid-investment categories were deducted in arriving at “net debt.” RIL’s own FY26 balance-sheet bridge deducts cash and marketable securities of Rs 2,49,704 crore from gross debt of Rs 3,74,421 crore, but that is the company’s presentation and should not automatically be treated as the agency’s exact adjustment. ^[4]
• Inter-company loans: No separate exclusion or adjustment for inter-company loans is identified in the published rating methodology. The stated approach is consolidation of RIL, its subsidiaries and selected strategic associates; therefore, the rationale does not support assuming an additional agency-specific inter-company-loan adjustment. ^[5]

Implication: the agency’s leverage measure is more conservative than a simple balance-sheet calculation because it captures lease liabilities, spectrum obligations and selected contractual commitments, while the exact cash deductions and any intra-group-loan eliminations are not separately quantified.

The agencies have identified two explicit downside triggers:

1. A considerably large, debt-funded capex programme or acquisition that weakens the capital structure. 2. Sustained consolidated net debt/PBILDT or net debt/EBITDA above 2.5x.

Neither agency has specified a separate post-capex deleveraging target, such as a required annual debt reduction or a fixed period for returning to a lower leverage level. The rating test is effectively whether cash generation and EBITDA growth after the capex peak are sufficient to prevent leverage from moving above, or remaining above, the 2.5x threshold.

Current cushion: CARE reported consolidated net debt/PBILDT of 1.40x as of March 31, 2026, versus 1.50x a year earlier; on a simple threshold comparison, this was 1.10x below the agencies’ 2.5x sensitivity level. CARE’s ratio includes deferred spectrum payments and lease liabilities. ^[5] Crisil also treats deferred spectrum liabilities and selected long-term contractual obligations of Jio’s fibre, tower and pipeline infrastructure arrangements as debt. ^[7]

The relevant risk is therefore not simply whether capex peaks, but whether debt-funded spending continues while O2C earnings remain cyclical and Digital Services’ newly capitalised assets do not yet generate sufficient incremental EBITDA. RIL reported FY26 capex of Rs 1,44,271 Crores, principally directed toward O2C and New Energy, alongside continuing investment in Digital Services and Retail; management said these requirements were funded by cash profits. ^[8] In Q1 FY27, management reported approximately Rs 39,000 Crores of capex and net debt of around Rs 1,23,000 Crores, slightly below March. ^[9]

Management also said capex decisions are assessed against EBITDA-to-debt ratios and international rating levels, with the option of bringing in partners where appropriate, but it did not provide a quantified capex ceiling or a formal deleveraging timetable. ^[10] Positive rating sensitivities were listed as “not applicable”, so the agencies have not specified a numerical trigger for an upgrade. ^[11]

Verdict: Rating agencies place Reliance Industries at the strongest end of this peer framework on liquidity quality and financial flexibility. CARE and CRISIL describe RIL’s liquidity as “superior” and its financial flexibility as “exceptional,” supported by a very large consolidated liquidity pool, established domestic and international market access, and unutilised bank lines. This is a stronger assessment than the “adequate lines,” “sufficient funding sources” or generic refinancing policies disclosed by most of the oil-company peers.

The comparison is directional rather than fully like-for-like: RIL is assessed on a consolidated, diversified basis, while the peer set is dominated by downstream oil companies; rating agencies also use different leverage definitions.

Peer benchmark

What distinguishes RIL

• Liquidity scale and quality: RIL’s Rs 246,791 Crores of consolidated cash and equivalents is on a different absolute scale from BPCL’s Rs 17,761 Crores. The comparison is not a liquidity ratio because company size, working-capital intensity and definitions differ, but it explains why the agencies use stronger language for RIL. ^{[13] [17]}
• Access is treated as a structural strength: RIL has a demonstrated record of raising funds from domestic and international bond markets at competitive rates, alongside unutilised bank lines. ^[34] The peers generally describe access to debt markets and bank facilities as available or adequate; RIL’s assessment goes further by combining access with substantial liquid investments and diversified operating cash flows.
• Leverage remains comfortably below the agency’s sensitivity point: RIL’s consolidated net debt/PBILDT was 1.40x at March 31, 2026, against CARE’s negative sensitivity of sustained net debt/PBILDT above 2.5x. ^{[1] [11]} The mechanical gap is 1.10x, although this is not a forecast cushion and the definitions are agency-specific. RIL’s rating analysis also includes deferred spectrum liabilities and selected contractual obligations as debt, which makes the measure more conservative than a simple balance-sheet borrowing ratio. ^[7]
• Peer leverage ratios should not be overinterpreted: BPCL’s 0.11x and CPCL’s 0.18x debt/equity are lower than RIL’s reported overall gearing of 0.46x, but they are not equivalent to RIL’s consolidated net debt/PBILDT. ^{[19] [31]} RIL also carries large telecom, retail, digital and new-energy investment commitments that are not comparable with a single-refinery balance sheet.
• The principal monitorable is debt-funded expansion: CARE identifies major debt-funded capex and sustained leverage above 2.5x as negative rating sensitivities for RIL. ^[11] This matters because new-energy and digital infrastructure investments are capital intensive, even though the agencies currently believe RIL’s cash generation and flexibility can support the programme. ^[13]

Bottom line: RIL is not necessarily the lowest-levered company on every reported accounting ratio. Its relative advantage is broader: large immediately available liquidity, diversified cash-flow generation, proven market access, unutilised bank capacity and a consolidated rating framework that still shows leverage comfortably below the agency’s stress threshold. MRPL provides the most explicit peer liquidity-coverage benchmark, while IOC, BPCL, HPCL and CPCL mainly provide evidence of investment-grade funding access and balance-sheet discipline rather than an equally strong agency characterization of financial flexibility.