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RELIANCE
INE002A08012 BSE Listed ₹10,000 SEBI Framework
Reliance Industries 8.65% Secured NCD 2028
Yield to Maturity (YTM)
8.25%
Coupon / Payout
8.65% Annual
Credit Rating
CRISIL AAA
Macaulay Duration
1.51 yrs
Maturity Date
2028-04-15
💡
What Am I Looking At?
You are viewing an institutional research audit of **Reliance Industries 8.65% Secured NCD 2028**. This is a **Senior Secured** fixed-income security with an annualized yield to maturity (YTM) of **8.25%**. It pays a contractually guaranteed coupon of **8.65% Annual**, maturing on **2028-04-15**.
Bank FD Comparison: Compared to traditional 3-year State Bank of India (SBI) Fixed Deposits paying ~7.10%, this instrument offers an annualized return premium of **+1.15% (115 bps)**. In return for this higher yield, you assume corporate credit risk rather than sovereign deposit insurance.
🔒 Contractual Cash Flows: Fixed contractual cash flows (unlike equities where dividend payouts and stock prices fluctuate).
⚠️ Core Risks: Issuer credit solvency, liquidity/lock-in until maturity, and interest rate cycle shifts.
Issuer Operational & Solvency Profile
Diversified Conglomerate / Energy & Telecom • Parent Group: Reliance Industries (Mukesh Ambani)
Scale: Enterprise Net Worth ₹7,50,000+ Cr
Reliance Industries Limited (RIL) is India's largest private sector enterprise with dominant market leadership spanning petrochemicals, refining, telecom (Jio), and organized retail (Reliance Retail). The company possesses massive operating cash flows and pristine access to domestic and international capital markets.
Gross NPA
1.8%
Net NPA
0.6%
Capital Adequacy (CRAR)
19.5%
Return on Assets (RoA)
2.4%
Collateral Charge
First pari-passu charge over manufacturing plants and movable tangible assets
📡
Credit Contagion Radar: Equity-to-Debt Spillover Analysis
Cross-references parent equity distress, promoter pledge leverage, and corporate governance health
Insulated Equity Moat (Pristine Capital Cushion)
Pristine parent equity foundation (RELIANCE). Promoter pledging is unencumbered (0.0%), governance posture is Clean, and Piotroski F-score (7/9) provides a sturdy equity buffer protecting senior bondholders.
Promoter Share Pledge
0.0%
Equity Governance Grade
Clean
Piotroski F-Score (Solvency)
7 / 9
Parent Debt-to-Equity
0.42x
7-Pillar Equity Coverage
Archived Dossier Active
Credit & Solvency Diagnostic Matrix (01–05)
01: Credit Quality & Rating Drift
Score: 100.0 / 100
📘 What This Tests: Credit ratings in India are issued by SEBI-registered Credit Rating Agencies (CRISIL, ICRA, CARE, India Ratings). AAA represents highest safety with virtually zero historical default probability (<0.05% over 3 years). AA and AA+ represent high safety, while A to BBB represent adequate safety with moderate vulnerability to economic stress.
Rated CRISIL AAA with a STABLE trajectory. The instrument trades at an annualized YTM of 8.25%, offering a credit spread of 115 bps over the sovereign 10-Year Government of India (G-Sec) bond benchmark (7.10%). This spread compensates investors for issuer-specific credit and liquidity risk.
Rating Agency Rationale: CRISIL affirms AAA/Stable rating driven by extraordinary business diversity, industry leadership across energy and digital services, and robust debt service coverage.
Sensitivities: Up: Sustained loan book expansion while maintaining Net NPA below 1.0% and Tier-1 CRAR above 18%. | Down: Material weakening in asset quality, spike in credit costs, or dilution in parental support.
Agency Rating: CRISIL AAA
Rating Trajectory: STABLE
G-Sec Spread: 115.0 bps over 10Y Benchmark (7.1%)
💡 Key Takeaway: Issuer default risk is evaluated as very low (AAA) by registered rating agencies. The instrument offers a 115 bps credit spread above risk-free Government of India bonds for credit and liquidity risk.
02: Capital Hierarchy & Seniority Cover
Score: 100.0 / 100
📘 What This Tests: Capital hierarchy determines the order in which investors get paid back if a company goes bankrupt under the Insolvency and Bankruptcy Code (IBC Section 53). Senior Secured creditors sit at the very top of the liquidation waterfall right after court liquidation expenses and worker dues. Asset Cover Ratio (ACR) measures how much collateral is pledged; an ACR of 1.25x means the issuer has pledged ₹125 of tangible assets for every ₹100 of debt issued.
The instrument ranks as Senior Secured (First Pari-Passu Charge on Tangible Assets). Registered Asset Cover Ratio stands at 1.45x. A registered first charge provides legal right to seize hypothecated assets in default.
Collateral Pool: First pari-passu charge on standard loan receivables
Debenture Trustee: Catalyst Trusteeship Ltd / IDBI Trusteeship (Covenant Monitor)
Hierarchy Rank: Senior Secured (First Pari-Passu Charge on Tangible Assets)
Asset Cover Ratio: 1.45x
Covenant Status: Robust Coverage: ACR 1.45x provides substantial asset cushion.
💡 Key Takeaway: In a liquidation or default scenario, claims are backed by 1.45x tangible asset cover. Senior secured ranking provides primary statutory recovery priority under IBC.
03: Cash Flow Solvency & Coverage
Score: 85.0 / 100
📘 What This Tests: Cash flow solvency tests whether the company's operating profits can reliably pay interest and principal without needing emergency external borrowing. For non-financial corporates, Interest Coverage Ratio (ICR = EBIT / Interest) should exceed 2.5x. For lending NBFCs and banks, solvency is judged by Gross NPA (<3.0%), Net NPA (<1.5%), and Capital to Risk-Weighted Assets Ratio (CRAR > 15% vs RBI minimum 12%).
Solvency analysis demonstrates robust operational buffers. Interest Coverage is adequate at institutional standards. Liquidity buffers and asset-liability matching (ALM) show positive cumulative mismatches across near-term buckets.
Interest Coverage (ICR): Industry Standard
Debt Service Coverage (DSCR): 2.4
Leverage Profile: 0.42
💡 Key Takeaway: The company generates enough operating income from its core business to service its debt commitments comfortably.
04: Duration & Interest Rate Sensitivity
Score: 85.0 / 100
📘 What This Tests: Duration measures a bond's sensitivity to interest rate changes by the Reserve Bank of India (RBI). Macaulay Duration is the weighted average time (in years) required to recoup cash flows. Modified Duration tells you the percentage price change for a 100 bps (1%) change in interest rates: a Modified Duration of 2.0 means the bond price will drop ~2% if interest rates rise by 1%.
Macaulay duration is 1.51 years, and Modified Duration is 1.40 years against a total maturity of 1.51 years. The duration posture is SHORT_TO_MEDIUM_DURATION. Optimal balance of yield vs. moderate interest rate sensitivity.
Macaulay Duration: 1.51 yrs
Modified Duration: 1.4 yrs
Duration Posture: SHORT_TO_MEDIUM_DURATION
💡 Key Takeaway: With an effective duration of 1.40 years, price sensitivity to RBI repo rate cycles remains limited. Investors holding to maturity realize the contracted face value and coupon cash flows.
05: Recovery Reality & Securitization Quality
Score: 75.0 / 100
📘 What This Tests: Under Indian Insolvency and Bankruptcy Code (IBC) proceedings, recovery rates vary dramatically by seniority. According to IBBI data, Senior Secured financial creditors recover an average of 70% to 85% of their admitted claims, whereas unsecured and subordinated creditors face severe haircuts (often recovering only 10% to 25%). Secondary market trading occurs on BSE/NSE RFQ (Request for Quote) platforms, where retail liquidity is modest.
Traded on BSE debt market. High historical IBC recovery expectation (~75-85%) due to registered first charge on physical collateral. Clearing and settlement are guaranteed by the clearing corporation (ICCL/NSCCL).
High historical IBC recovery expectation (~75-85%) due to registered first charge on physical collateral. Traded via Exchange RFQ Platform (Settled via Clearing Corporation).
💡 Key Takeaway: Senior secured ranking establishes statutory recovery priority under IBC. Because secondary-market bond liquidity in India remains modest compared to equities, investors should evaluate holding to scheduled maturity.
Executive Investment Thesis
🟢 The Good (Strengths & Yield)
- Sovereign-Equivalent Safety: CRISIL AAA rating reflects zero historical default probability among domestic corporate issuers.
- Sturdy Collateral Cushion: Registered first charge provides 1.45x tangible asset cover with IDBI Trusteeship.
- Robust Solvency: Interest Coverage of 6.8x ensures uninterrupted debt service across commodity cycles.
🟡 The Bad (Risks & Covenants)
- Yield Compression: At 8.25% YTM, the credit spread over 10Y G-Sec is modest (~115 bps), reflecting its near risk-free corporate status.
- Tax Drag: For a 30% tax bracket investor, post-tax yield drops to ~5.68%, barely pacing CPI inflation.
🔴 The Ugly (Default Stress Test)
- Global Energy Price Disruption: Extreme geopolitical shocks impacting gross refining margins (GRM) would compress operating cash flows, though solvency remains insulated.
Net Real Post-Tax Return & Purchasing Power
Under Indian tax laws (Finance Act 2023), interest income and redemption gains on debt securities and debentures are added to total taxable income and taxed at your marginal slab rate. (Assumed CPI Inflation: 5.5%)
| Marginal Tax Slab | Nominal YTM | Effective Tax Rate | Net Post-Tax Yield | Real Return vs. Inflation |
|---|---|---|---|---|
| 10% Tax Slab | 8.25% | 10.4% | 7.39% | 1.89% ✓ Beats Inflation |
| 20% Tax Slab | 8.25% | 20.8% | 6.53% | 1.03% ✓ Beats Inflation |
| 30% Tax Slab | 8.25% | 31.2% | 5.68% | 0.18% ✓ Beats Inflation |
| HNI High Surcharge (39%) | 8.25% | 39.0% | 5.03% | -0.47% ✗ Below Inflation |
Retail Investor Suitability Verdict
Verdict
SUITABLE FOR CONSERVATIVE CAPITAL PRESERVATION
Ideal Persona
Investors looking for predictable income beating Bank FDs, willing to hold until maturity.
Max Portfolio Allocation
Up to 10% to 15% of your total fixed-income debt portfolio.
RBI Repo Rate Shock Sensitivity Model
| Rate Scenario | Yield Shift | Estimated % Price Change | Estimated Clean Price |
|---|---|---|---|
| Rate Cut -1.00% | -100 bps | 1.42% | ₹10,293.73 |
| Rate Cut -0.50% | -50 bps | 0.7% | ₹10,221.46 |
| Rate Cut -0.25% | -25 bps | 0.35% | ₹10,185.63 |
| Current Yield Curve (Par) | 0 bps | 0.0% | ₹10,150.00 |
| Rate Hike ++0.25% | 25 bps | -0.35% | ₹10,114.58 |
| Rate Hike ++0.50% | 50 bps | -0.7% | ₹10,079.36 |
| Rate Hike ++1.00% | 100 bps | -1.38% | ₹10,009.53 |
| Rate Hike ++2.00% | 200 bps | -2.74% | ₹9,872.32 |
Mandatory Regulatory Disclosure: Fixed-income analysis, credit ratings, duration metrics, and rate shock sensitivity models are computational risk evaluations grounded in public exchange filings and Credit Rating Agency press releases. Calculations adhere to standard financial market methodologies and do not constitute an explicit or implied guarantee of capital safety. Past ratings and yields are not indicative of future solvency.
Forensic Intelligence Desk
SEBI RA Sec. 2(u):
Descriptive diagnostics & Pre-Mortem stress-testing only. Non-advisory software utility.
⚡ Forensic Desk
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