Moody's Investor Services has changed the outlook on the ratings of Reliance Industries' debt securities from negative to stable.
"The current Ba2 rating on debt securities issued by Reliance as well as the senior unsecured issuer and senior implied ratings have been affirmed at Ba2," the international ratings agency said today in a press release.
Moody's cited the Reliance group's strong operating performance as reflected in its first quarter results, the belief that risks associated with its investment in affiliated companies like Reliance Infocomm was abating and a better understanding of the group's ongoing capital expenditure, "which we believe will be manageable within the context of the group's own cash-flow generating capacity", as reasons for changing its outlook.
Moody's said Reliance's current ratings could be raised "if the group continued to perform strongly and the amount of incremental investments and/or financial support for non-consolidated entities such as Hindustan Petroleum, Reliance Infocomm, BSES or any new ventures remained limited".
The rating agency noted the Reliance management's intention to limit further investments in Reliance Infocomm to $1 billion in 2003-04 and the expectation that the WLL operator would achieve cash breakeven at least by this financial year.
However, Moody's also warned that any deterioration in the performance of the Reliance group or failure to achieve the returns expected from the telecom or petroleum business could result in the ratings being lowered.