Bernstein rates Reliance at 'Outperform'; pegs 22 pc rise in its stock prices
Jun 13, 2023
New Delhi [India], June 13 : Bernstein Research has given Reliance Industries Ltd an "outperform" rating and said it sees a potential upside of 22 per cent in the conglomerate's share prices.
A report by the research firm pegged the target share price of the Mukesh Ambani-led firm at Rs 3,040 as against the current market price of Rs 2,511.
The brokerage firm has pegged clean energy (solar, battery, electrolyzers, and fuel cells) as a new growth pillar for Reliance, the research firm said in a report.
India is targeting a solar capacity of 280 GW and 5 million tonnes of green Hydrogen production by the year 2030.
"RIL could potentially achieve USD 10 billion of revenue from New Energy business in 2030 which represents 40 per cent of the TAM. By 2030, we estimate RIL could capture 60 per cent, 30 per cent and 20 per cent of solar, battery and hydrogen TAM respectively," it said.
Reliance is building a green energy business to supply the equipment India will need for its green energy revolution. Reliance has also committed to being net zero by 2035, which is earlier than any other energy company in the region.
"Overall, Reliance is building a fully integrated end-to-end renewables energy ecosystem for customers through solar, batteries and hydrogen. No other energy company is investing across the entire new energy value chain but if Reliance can pull this off then the value creation and earnings potential will be substantial," the report said.
For solar energy, the report said it expects Reliance can reach 100 GW of installation by 2030 which is 36 per cent of the total 2030 India solar capacity of 280 GW.
For batteries, it said Reliance could achieve a similar market share of 36 per cent with a battery capacity of 50 GWh versus an expected battery capacity of 139 GWh in 2030.
For hydrogen, it expects Reliance can capture about 19 per cent of the market with 16 GW of cumulative electrolyzer capacity by 2030 versus our expected Total Addressable Market (TAM) of 81 GW.
"We believe the clean energy business to be worth Rs 200/share today but with plenty of scope for expansion over time," it said.
Reliance, planning big on new energy business, aims to have 100 GW of installed solar capacity by 2030.
Besides its new energy business, the conglomerate oil-to-chemicals segment, according to the report, also continues to take benefit from low-cost Russian crude oil while the subsequent finished product prices remain strong.
"Based on our estimates, we believe Reliance EBITDA will grow from INR 1.5 tn in FY23 to INR 2.4 tn in FY27 (+ 13 per cent CAGR) mainly through the growth in new energy, digital and retail...," the report said.
