India Ratings upgrades RInfra's credit rating on non-fund-based working capital

Rating agency Ind-Ra on Friday upgraded Reliance Infrastructure’s credit rating on its existing non-fund-based working capital limits, reflecting its substantial deleveraging efforts, resulting in net zero debt with banks and financial institutions.

India Ratings and Research upgraded the credit rating from ‘IND D’ to ‘IND B/Stable/IND A4’.

Additionally, the company said in a regulatory filing that Ind-Ra has withdrawn the ratings assigned to the earlier proposed fund-based and non-fund-based limits, which were not raised or availed by the company.

This upgrade represents a significant improvement of three notches in the company’s credit profile, achieved after six years at the IND D rating level, it stated.

The upgrade also reflects the company’s substantial deleveraging efforts, resulting in net zero debt with banks and financial institutions, it stated.

The improvement in rating also reflects Reliance Infra’s timely servicing of standalone debt obligations for three consecutive months ended 30 June 2025.

Regarding the guaranteed debt, it stated that the company has executed one-time settlement agreements with the lenders of its subsidiaries, including the final payment to the lender by JR Toll Road Private Limited on June 23, 2025.

These repayments were facilitated by a significant long-term capital infusion through the issuance of warrants amounting to ₹3,010 crore, of which ₹750 crore was received in FY25 and ₹225 crore in 1QFY26, which have eased liquidity pressures, boosting Reliance Infra’s credit profile, it noted.

However, it stated that the ratings continue to be constrained by the company’s weak financial risk profile and its exposure to risks arising from the ongoing arbitration proceedings, and large payables and contingent liabilities involving both standalone and financially stressed subsidiaries, which remain key monitorables.

Nevertheless, the ratings are supported by the substantial deleveraging of the standalone balance sheet, improved revenue visibility from the engineering and construction (E&C) segment, and the company’s long-standing presence and experience in the infrastructure sector.

The company’s E&C business is likely to turn around in FY26, driven by management’s expected order flows in the new age business.

Moreover, it stated that the company issued ₹3,010 crore of warrants in October 2024 and has board-approved plans to raise ₹3,000 crore through long-term foreign currency convertible bonds (FCCBs) and another ₹3,000 crore through qualified institutional placement (QIP) of equity.