RIL’s Clean Energy Business May Be Worth $36 Billion In Five Years, Says Bernstein

Reliance Industries announced a massive Rs75,000 crore worth of investments in green energy over the next three years at its 44th annual general meeting in June.

MUMBAI : Reliance Industries Ltd’s (RIL) recent announcement on new energy operations may create a clean energy business worth $36 billion over the next five years, brokerage firm Bernstein said in a note on Thursday.

It said most clean energy companies are trading at 2-3 times price to sales. Based on the capex for clean energy, it sees a route to Reliance building a clean energy business, which could be worth $36 billion or Rs395/share. The brokerage firm is overweight on the stock and has raised its target price to Rs2,830 apiece from Rs2,470.

At its 44th annual general meeting in June, the oil-to-telecom conglomerate announced a massive Rs75,000 crore worth of investment in green energy over the next three years. The money is mostly for an eco-friendly ‘giga complex’ to be set up in Jamnagar, Gujarat, that will house a fully-integrated renewable energy ecosystem.

“Now, in 2021, we are launching our new energy business with the aim of bridging the green energy divide in India and globally,” RIL chairman Mukesh Ambani had said in the AGM.

The company will establish and enable at least 100GW of solar energy by 2030. A significant part of this will come from rooftop solar and decentralised solar installations in villages.

Other big announcements at the AGM were the launch of the new smartphone JioPhone Next with Google targeting 30 crore 2G users and induction of Aramco chairman to the RIL Board, which Bernstein expects is positive for the spin-off its oil to chemicals business.

For FY22, the brokerage firm expects Reliance to deliver O2C EBITDA of Rs522 billion (+90% y-o-y). It remains optimistic that a deal will come together with Aramco, albeit at a slightly lower valuation. It also expects Jio to continue to focus on subscriber additions and forecast a 44% revenue share by fiscal 2025.

Bernstein expects RIL’s retail operations to grow three times in the next 3-5 years, with a robust CAGR of 35-40%.

Source: livemint