Active Stocks
Fri Apr 12 2024 15:57:45
  1. Tata Steel share price
  2. 163.50 -1.00%
  1. NTPC share price
  2. 362.00 -0.32%
  1. ITC share price
  2. 430.10 -1.56%
  1. HDFC Bank share price
  2. 1,518.90 -1.10%
  1. State Bank Of India share price
  2. 766.75 -1.57%
Business News/ Markets / Stock Markets/  Reliance Industries to see valuation re-rating led by New Energy business, says Nuvama Equities; raises target price
BackBack

Reliance Industries to see valuation re-rating led by New Energy business, says Nuvama Equities; raises target price

Reliance Industries has strategically invested in ten global technology innovators across New Energy verticals. These companies come with strong expertise that is likely to assist RIL accomplish its New Energy vision.

Reliance Industries aims to be one of the world’s leading New Energy and new materials company as part of its 15-year vision. (Photo: Bloomberg)Premium
Reliance Industries aims to be one of the world’s leading New Energy and new materials company as part of its 15-year vision. (Photo: Bloomberg)

Reliance Industries Ltd (RIL) is sprinting towards commencing New Energy-chain production and with its strategic mergers & acquisitions (M&A), PLI-wins and plant progress. Thus, given its fully backward integrated 20GW module capacity, Reliance Industries needs a valuation re-rating for its New Energy business, analysts said.

Nuvama Institutional Equities raised its target price on Reliance Industries shares by 5% to 3,105 per share by rolling forward RIL’s New Energy valuation to FY26E sales. It has a ‘Buy’ rating on the RIL shares.

Reliance Industries has strategically invested in ten global technology innovators across New Energy verticals. These companies come with strong expertise that is likely to assist RIL accomplish its New Energy vision. The company aims to be one of the world’s leading New Energy and new materials company as part of its 15-year vision, as per Nuvama Institutional Equities.

Also Read: RIL Q3 Result Preview: Digital, retail business to drive profit, revenue; O2C business may remain under pressure

The brokerage firm highlighted that RIL is smartly inching closer to its New Energy vision, bagging several PLIs on the way. It won PLIs under both rounds of solar modules. RIL (apart from Greenko) is the only company to win incentives for both G H2 and Electrolysers concluded recently. 

It won incentives of $0.3/kg for electrolyser capacity of 300MW (25% of allotted capacities) and $0.23 for G H2 capacity of 90,000MT (22% of allotted capacities). Besides, it has won PLI under ACC battery storage for 5GW capacity.

Moreover, RIL has put out a schema of its upcoming Dhirubhai Ambani Green Energy Giga Complex in Jamnagar spread over 5,000 acres. This is targeted to start operations by H2CY24 as mentioned by its Chairman Mukesh Ambani at the recently concluded Gujarat Vibrant summit, the brokerage noted.

(Exciting news! Mint is now on WhatsApp Channels :rocket: Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!)

“RIL’s strength lies in its ability to build businesses of global scale and execute complex, time-critical and capital-intensive projects. These strengths shall prove advantageous as the company embarks on large investments in all segments," Nuvama Equities said. 

It expects its consumer business (Digital and Retail) to contribute ~50% to EBITDA from FY25 given its strong expansion and customer base. It is now ascribing a rich valuation to JIO and Retail seeing their huge potential while remaining positive on the core O2C business (both refining and chemicals). 

“We believe refining margins in Asia would rise due to a ‘paradigm shift in regional refining dynamics’ from West to East, which are favourable for a complex refiner like Reliance. Global utilisation rates have bottomed out in chemicals. RIL is almost done with its capex cycle, investing in world-scale projects such as petcoke gasification, off-gas crackers and telecoms, which are expected to drive future growth in months to come," said the brokerage.

Also Read: Jio Financial tweaks plans after RBI move on unsecured lending

RIL has started commissioning and remaining projects of KG-D6, which shall enhance overall gas production. RIL’s foray into the new energy business shall unleash the next leg of growth, besides aiding its conventional business, it added.

Meanwhile, Reliance Industries will announce its earnings for the quarter ended December 2023 on Friday, January 19. The energy-to-telecom conglomerate is expected to report a decent set of numbers for the quarter, mainly due to higher utilisation of refineries sustaining their strong operating efficiency.

RIL share price has gained over 16% in the past three months, while the stock is up more than 9% in one year.

At 12:50 pm, Reliance Industries shares were trading 0.21% lower at 2,717.00 apiece on the BSE.

Catch Live Market Updates here

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 18 Jan 2024, 12:54 PM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App