15 Apr , 2022 By : Kanchan Joshi
It has been almost a year since Reliance Industries Ltd (RIL) outlined its foray into new energy solutions through four Giga factories - integrated solar photovoltaic factory, advanced energy storage, electrolyzers manufacturing facility, and fuel cells.
Brokerage and research firm Motilal Oswal said it has examined the prospects of these factories and highlight the various M&As RIL has carried out in these areas. The brokerage house has Buy rating on Reliance Industries shares on new-energy plans with a target price of Rs2,880 apiece.
RIL has taken a step further, by announcing its vision to replace fossil fuels used in the Jamnagar complex with renewables, thereby utilizing synthesis gas from its gasifiers to manufacture a host of organic chemicals, the brokerage highlighted. So far, the Mukesh Ambani-led conglomerate has invested Rs109 billion (including commitments) towards the new energy initiatives.
“A decade back, investors had concerns on investments of RIL in both Jio and Retail. However, RIL turned both the businesses around such that they stand as tall as the behemoth standalone segment in terms of EBITDA contribution. In fact, due to better prospects, Jio and Retail command a staggering two-thirds of the total valuation currently," the note stated.
However, these new-age initiatives involve cutting edge fast-evolving technologies that are in nascent stages now. Hence, it is difficult to say – at this stage – if RIL would be able to score a hat-trick after its successful turnarounds of Jio & Retail, the brokerage added. Key downside risk to its call, as per Motilal Oswal are slower-than-expected traction in the Jio and Retail segments.
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