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What Analysts Made Of Mukesh Ambani’s Next Big Bet For Reliance Industries – BloombergQuint

Analysts lauded Reliance Industries Ltd.’s investment in green business, with most of them maintaining their bullish investment recommendations for the world’s biggest oil refinery.

The Mukesh Ambani-owned conglomerate plans to spend Rs 75,000 crore — Rs 60,000 crore in next three years and Rs 15,000 crore on value-chain partnerships and future technologies — to build an ecosystem to make solar modules and batteries to hydrogen fuel cells in India.

RIL has started work on developing the Dhirubhai Ambani Green Energy Giga Complex on 5,000 acres in Jamnagar, Ambani told investors at the company’s 44th annual general meeting.

Ambani also said Saudi Aramco would invest in the Indian group’s oil-to-chemicals business, and the deal would close this fiscal. Aramco’s chairman, too, would join RIL’s board as an independent director as part of the deal.

Besides, it unveiled an affordable smartphone, JioPhone Next, co-developed with Google Inc. to entice 2G and basic phone users; detailed five key initiatives for Reliance Retail; and indicated on 5G launch soon.

Here’s what analysts have to say about RIL…


  • Maintains ‘neutral’ with a price target of Rs 2,250 apiece.

  • Higher value for retail (on higher peer group valuations) drives March-22 target price to Rs 2,250 versus earlier price target of Rs 2,055 apiece.

  • Key highlight from AGM was RIL’s announcement of about $10-billion capex in green/renewable businesses over the next three years.

  • The smartphone announcement and the induction of Aramco chairman into RIL’s board were on expected lines.

  • There was no timeline on WhatsApp-JioMart, no timeline on IPOs of Jio/retail.

  • Given the run-up in the stock price over the last six weeks (17% v/s 7% for Nifty), JPMorgan would not be surprised to see some of the outperformance reverse.

  • Value accretion could increase from the investments as RIL ramps up execution on these businesses.

Motilal Oswal

  • Reiterates ‘buy’ with a target price of Rs 2,430 a share.

  • RIL announced its next big value creation engine with the launch of its New Green Energy business. With the peak of the investment cycle behind in Reliance Jio and Reliance Retail, it now plans to invest Rs 75,000 crore towards this ambition over the next three years.

  • A higher multiple for the digital business captures the revenue opportunity, potential tariff hikes, and opportunity in the feature phone market.

  • Have also given a higher multiple for the retail business, which captures the acceleration in store openings, digital commerce, and the new JioMart platform

  • Values the O2C business at FY23E EV/Ebitda of 7.5x, arriving at a valuation of Rs 764 a share for the standalone business, and add Rs 68 for the E&P assets.

  • Ascribes an equity valuation of Rs 847 a share to Reliance Jio on FY23E 20x EV/Ebitda.

  • Ascribes equity valuation of Rs 755 a share to Reliance Retail on FY23E 35x EV/Ebitda, factoring in the recent stake sale.


  • Maintains ‘buy’ rating with a target price of Rs 2,540 apiece.

  • RIL’s renewables transition plan dominated the AGM. The plan sounded ambitious with little details but should improve its ESG score.

  • The energy transition plan is essential in given that a significant portion of its conventional energy assets will approach end of life over the next two decades. This will allow RIL to participate in India’s energy consumption growth story over a longer horizon.

  • The extent of the upfront cash component in the Aramco transaction will determine the extent of the benefit to RIL. An all-cash transaction will also reduce RIL’s carbon footprint.

  • RIL’s keenness on 5G services may lead to a 5G capex cycle and hit free cash flow but may consolidate the market.

  • The AGM focused on the new commerce initiatives even while brick & mortar expansions would continue.

  • With specifics for the renewable capex and the 5G foray not yet available, the research house’s capex assumptions would undergo upward revisions.


  • Retains ‘outperform’ with a target price of Rs 2,250 apiece.

  • Welcomes Reliance exhibiting hopes of closing the O2C stake sale with Aramco this year.

  • While clarity on the new energy foray is useful, it will be watching additional triggers for the stock in the smartphone and retail end.

  • Big take-up of new smartphones and progress in omni-channel retail will be more important triggers.