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RIL's plan to strengthen balance sheet hinges on telecom, e-commerce plans

However, the company's balance sheet will be stronger in a year, Srikanth said, as its investment goes down and it transfers its fiber and tower undertakings to separate companies

Dhwani Pandya | Bloomberg 

Ltd.’s plan to strengthen its balance sheet will hinge on future capital spending as credit market participants zero in on whether the company will be able to slow those outlays over the next year.

The conglomerate has invested about $64 billion across telecom and retail as well as petrochemicals and oil refining expansions, Joint CFO V. Srikanth said during last week’s earnings briefing. Reliance will probably continue to spend to build capacities in its telecom business as well as on its e-commerce and broadband operations, according to Nitin Tiwari, an analyst with Antique Stock Broking Ltd.

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Reliance

Source: Bloomberg

While petrochemicals has been a key driver for the group’s earnings, contributing about half of total operating profit, shrinking profits from converting dirty residual oil into cleaner light fuel pose a headache. However, the company’s balance sheet will be stronger in a year, Srikanth said, as its investment goes down and it transfers its fiber and tower undertakings to separate


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Spending on telecom unit and rising debt have been “a key worry, and monetization of tower/fiber could allay this,” wrote Mumbai-based and Ravi Adukia, analysts at Nomura Holdings Inc.


— With assistance by Saket Sundria

Bloomberg

First Published: Thu, January 24 2019. 09:39 IST
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