Reliance Industries (RIL) shares surged to a new record high in Monday’s deals after India’s top valued firm announced acquisition of two firms, accelerating its push into green energy. Tracking gains in index heavyweights RIL and banks, Nifty soared to record high of 18,000.
Billionaire Mukesh Ambani’s RIL during the weekend announced two back-to-back acquisitions of Norway-based solar panel manufacturer REC Solar Holdings and purchase of 40% stake in Shapoorji Pallonji Group’s Sterling & Wilson Solar.
RIL acquired REC Group, an integrated solar PV maker, for $771 million. The company intends to set up 10 GW in Jamnagar using REC’s technology. “REC is the only player globally to commercialise a tech that consumes 75% less power than Chinese comps. It has patented tech and opens up the export market for RIL’s solar business,” analysts at Jefferies said in a note.
China’s restrictions on energy intensive industries and widening winter emission reduction campaign have cut refinery run rates. Jefferies sees a potential for 10-12% upgrade to consensus O2C Ebitda estimates for FY22E if China sticks to its climate goals till the Winter Olympics in February 2022. Therefore, it reiterate its positive stance on RIL. The brokerage has maintained its ‘Buy’ rating on the stock with a target price of of ₹3,050 per share.
The oil-to-retail conglomerate also announced its 40% stake buy in Sterling & Wilson Solar Ltd, a Shapoorji Pallonji group (SP group) company, for about ₹2,845 crore at ₹375 per share.
Ambani pledged in June had announced to spend on alternative energy over three years. At RIL’s annual general meeting (AGM), he announced spending of ₹60,000 crore on creating clean energy manufacturing capacity and ₹15,000 crore on the value chain and technology.
The new investments are meant to pivot the conglomerate to cleaner fuels. Reliance gets nearly 60% of its annual revenue from its oil-related business.
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