Global rating agency Standard & Poor said that it has revised its outlook on Reliance Industries Ltd to stable from negative. At the same time, the agency affirmed the 'BBB' long term corporate credit rating on RIL and the 'BBB' issue rating on the company's senior unsecured notes.

Ms Suzanne Smith Standard & Poor's Corporate & Government Ratings of South and Southeast Asia, MD and credit analyst said that "We revised the outlook to reflect our expectation of an improvement in RIL's financial metrics because we believe the consistent improvement in the company's operating performance over the past year is sustainable.”

The agency in its report said that RIL's EBITDA to have increased by 20% for FY 10. The improvement is driven by reasons such as gas production at the KG D6 block surpassing 60 mmscmd of gas within 12 months of starting production, the strong market conditions for the petrochemical business and the successful ramp-up of the new Jamnagar refinery.

It added that these factors offset the effects of the very weak market environment for the refining business.

The report said that RIL will further improve its operating performance by maintaining the existing level of gas production and a potential improvement in refining margins. But this depends on the favorable resolution of RIL's legal dispute with Reliance Natural Resources Ltd and NTPC.

Ms Smith said that "We have assumed that going forward, RIL would use most of its internal cash-flows for investment in growth opportunities.” She added that this would include small acquisitions and new capital expenditure plans such as the recently announced joint venture with Atlas Energy, Inc. We also believe that RIL's financial metrics currently do have some headroom to accommodate a potential adverse ruling on the legal dispute.

(Sourced from PTI)