New Delhi: Reliance Industries Ltd’s acquisition of Future Group’s consumer business will strengthen the retail footprint of India’s largest organised retailer, Moody’s Investors Service said on Wednesday.
Last week, RIL announced that it will acquire Future Enterprise Limited’s (FEL) consumer business for a purchase consideration of around Rs 24,713 crore.
“The transaction is credit positive because it will solidify its (RIL’s) position as the largest organised retailer in India and further diversify its earnings,” the rating agency said in a note.
Moody’s said despite a price tag of around USD 3.3 billion, the cost of the acquisition remains small relative to RIL’s total assets of around USD 155 billion and consolidated EBITDA of USD 12.8 billion for the fiscal ended March 31, 2020.
“As a result, the acquisition can be accommodated within RIL’s current rating,” it said. “Moreover, the company’s recent spate of asset monetisation and equity fundraising activities have created sufficient buffer within its credit metrics.”
The oil-to-telecom conglomerate will acquire Future’s retail, wholesale, logistics and warehousing units to help almost double its footprint.
“The acquisition will strengthen RIL’s position within the organised retail sector in India as it will be able to leverage on established brand names and vast network of stores currently owned and operated by the Future Group entities,” Moody’s said.
In addition, the acquisition will also allow RIL to step-up its retail footprint in states and territories where it currently does not have a significant presence.
