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Reliance Upgraded to Baa1 on Strong Operating Performance, Cashflow Generation
March 17, 2025
Reliance was upgraded to Baa1 from Baa2 by Moody’s, citing its increased scale, strong margins, and robust free cash flow generation. Reliance’s ability to maintain strong performance through economic cycles, thanks to its large scale, market share, and effective management supported the rating action. This was seen through its strong operating margins, and ability to generate positive free cashflow even during periods of lower metal prices and weak demand. Reliance exhibits low leverage (0.9x debt-to-EBITDA), high interest coverage (28.2x EBITDA/Interest), and consistent free cashflow generation, despite a slight YoY decline in 2024. Also, Reliance’s growth strategy, organic investments, strategic acquisitions, inventory management and decentralized structure support its strong performance. Moody’s notes that the recent strengthening of domestic steel prices should benefit Reliance. Above all, the rating agency highlights Reliance’s strong cash balance and liquidity, alongside ample borrowing capacity as additional positives.
Reliance’s dollar bonds were trading steady with its 2.875% 2032s at 86.68, yielding 5.22%.
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