Bernstein Research has given Reliance Industries Ltd an outperform rating and predicted a potential increase of 22% in the conglomerate’s share prices. The research firm has set the target share price for the Mukesh Ambani-led firm at Rs 3,040, compared to the current market price of Rs 2,511. According to the report, Reliance is expected to explore new growth pillars, including clean energy, particularly solar, hydrogen, battery, and fuel cells. India has targeted a solar capacity of 280 GW and 5 million tonnes of green hydrogen production by 2030. Reliance has committed to being net zero by 2035, setting itself apart from other energy companies in the region.
Bernstein believes that by 2030, Reliance could have a revenue of USD 10 billion from the New Energy business, accounting for 40% of the total addressable market (TAM). At the same time, the report estimates that Reliance could capture 60%, 30%, and 20% of the solar, battery, and hydrogen TAM, respectively. The company is constructing a green energy business that will equip India for its green energy revolution.
The report further suggested that Reliance could achieve 100 GW of solar installation in India by 2030, which represents 36% of the country’s targeted capacity. Furthermore, Reliance could achieve a similar market share of 36% in batteries, with an estimated battery capacity of 50 GWh, versus an anticipated battery capacity of 139 GWh in 2030. The report predicts that Reliance could capture approximately 19% of the hydrogen market, with 16 GW of cumulative electrolyzer capacity by 2030, compared to 81 GW of anticipated TAM.
According to the research firm, Reliance’s clean energy business is currently valued at Rs 200/share. Still, as the company expands its operations, there is ample room for expansion, making the value creation and earnings potential substantial. Beyond clean energy, Reliance also benefits from its oil-to-chemicals segment, which continues to prosper from low-cost Russian crude oil and strong finished product prices, the report stated.
The report predicts that Reliance’s EBITDA will rise from INR 1.5 tn in FY23 to INR 2.4 tn in FY27 (+13% CAGR), mainly due to the growth in new energy, digital, and retail. Overall, Reliance is constructing a fully integrated end-to-end renewable energy ecosystem for customers through solar, batteries, and hydrogen, making it stand apart as no other energy company is investing across the entire new energy value chain. If Reliance can pull this off, the value creation and earnings potential will be significant.
