RIL’s overall business set to double by 2030: Nuvama

The overall business of billionaire Mukesh Ambani-led Reliance Industries (RIL) is expected to double by 2030, led by telecom, retail, and new energy (NE) businesses, Nuvama Institutional Equities says in a report. During the company's 47th annual general meeting, Reliance Chairman and MD Mukesh Ambani said that Reliance Retail and Jio’s revenue and EBITDA is expected to double in the next 3-4 years, while NE business is set to contribute over 50% to consolidated profit in the next 5-7 years.

“Strong guidance for Digital, Retail, and huge petchem capacity adds shall drive fresh growth. Our Golden Refining era yielding +$10 per barrel Singapore complex GRM stays intact. RIL’s NE rollout shall not only add 50%-plus to PAT, but also re-rate valuations, including the O2C business given its net zero-carbon target by 2035,” the brokerage says in a report released today.

The brokerage has also retained a “Buy” call on the oil-to-telecom conglomerate with a 12-month price target of 3,786, an upside potential of 24.5% from the current market price.

As per the report, the earnings capacity of the NE business is likely to match that of the existing Oil-to-Chemicals (O2C) in the next 5-7 years, and is seen as having potential to add over 50% to consolidated profit of the conglomerate and much higher value, given clean energy. Currently, O2C is RIL’s largest profit base, contributing towards two-fifth of EBIDTA and more than half of attributable PAT.

New Energy is RIL’s newest and most ambitious growth engine. By 2024-end, the country’s most valued company is expected to commence operations of the solar giga-factory at the Dhirubhai Ambani Green Energy Giga Complex. The giga-factory is a ‘first of its kind’ integrated production house with manufacturing facilities of modules, cells, wafers, ingots, glass and polysilicon. Initially, the annual capacity would be 10 Gigawatt (GW) with progressive ramp-up to 20 GW.

“RIL is on track to fully commit and invest up to ₹75,000 crore to establish The Dhirubhai Ambani Green Energy Giga Manufacturing Complex, which would be the world's largest, most modern, modular, and integrated ecosystem at a single location,” the report notes.

The report also highlights that RIL has won solar module production linked incentives (PLIs), G H2 and electrolyser PLIs, which is estimated to translate cumulative incentive of $0.7 per kg (18% of G H2 value chain). “Operations shall commence soon with PV module production to kickstart later this year and battery and electrolysers from late-CY25.”

Retail and Digital EBITDA to double by FY28

Retail and digital EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortisation) is set to double by FY28, says Nuvama.

“RIL’s consumer business (JIO and Retail), which has scaled up over the last four–five years, would contribute 50% to total EBITDA by FY25, thereby replacing the O2C business, which current dominates EBITDA contribution.”

Reliance Retail is among the top-five global retailers in terms of number of stores and among the top-30 in terms of revenue. On the other hand, Jio is the largest global mobile network, with over 490 million customers; data prices at one-fourth of global average and one-tenth of developed nations.

As per the report, Reliance Retail raised equity capital worth ₹17,814 crore ($2.1 billion) during the year, achieving a valuation milestone of $100 billion.

In FY24, the company witnessed over 1 billion-plus footfalls with 1.25 billion-plus transactions, while it opened 1,840 new stores this year, bringing total store count to 18,836 stores. Also, registered customers clocked 300 million. Currently, Reliance Retail is spread across 7,000-plus cities with 4 million kirana partners and a wide bouquet of digital platforms. RIL has built an extensive 32 million square foot warehouse to support pan-India operations.

At the AGM, Ambani said that Jio commands 8% of total global data market, while its data prices are a fourth of global average and a tenth of developed countries. It is among top 12 companies in India in terms of net profit.

RIL plans to have a 2G–mukt India, with Jio uniquely positioned to convert 200 million plus 2G users to 4G. Fuelling the conversion, JioBharat offers entry-level 4G phones at prices lower than 2G phones. “RIL launched Jio AirFiber, its 5G-based home broadband service, in Oct-23. In just six months, Jio acquired 1mn AirFiber customers. By leveraging its deep-tech capabilities and continuously optimising every process, it acquired the next 1mn AirFiber customers in just 100 days. Now, RIL is targeting 1mn home customers every 30 days; with an overall target of 100mn,” the report noted.

In a bid to achieve the AI everywhere for everyone vision, RIL plans to establish GW-scale AI-ready data centres in Jamnagar – powered by RIL’s green energy. The company has announced the Jio AI Cloud Welcome Offer – up to 100 GB free to users, which is claimed to be the most affordable in the market.

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