CLSA sees significant potential in Reliance Industries Limited (RIL) stock, emphasizing that the market is overlooking its new energy business valued at $40 billion. According to CLSA, RIL offers an attractive entry point for 2025 catalysts such as the launch of new energy capacities, growth in retail, a rise in AirFiber subscribers, and a potential Reliance Jio Infocomm Initial Public Offering (IPO).
The brokerage firm forecasts a 70% upside in the best-case scenario and a 30% upside in its base case, driven by the company’s solar business. CLSA believes RIL’s upcoming solar Gigafactory, which is set to launch within the next few months, will further strengthen its market position. The 20GW solar facility is expected to generate annual solar business EBITDA of $1.7 billion over the next 4-5 years, with a $30 billion valuation based on industry comparisons.
Despite a recent dip in RIL’s stock price, CLSA notes that the stock is trading at a steep discount, neglecting the substantial value of its solar initiatives. The firm’s deep dive into the project financials reveals that the market is not factoring in the potential of RIL’s green energy segment, which could see substantial growth, particularly with favorable domestic and international market conditions.
India’s solar industry is poised for significant expansion, with a pledge to raise its solar capacity to 280GW by 2030. This presents a massive opportunity for Indian solar manufacturers, including Reliance, which aims to scale its solar module manufacturing with a focus on advanced technologies like HJT and perovskite to increase efficiency and lifespan.
With a target price of Rs 1,650 on the stock, CLSA recommends RIL as an attractive investment option for long-term growth in the renewable energy and telecom sectors.
Key Points:
- RIL Stock: CLSA sees 70% upside potential, driven by new energy business, retail, and Jio IPO.
- Solar Business: Valued at $30 billion, with a projected EBITDA of $1.7 billion annually in 4-5 years.
- Gigafactory Launch: 20GW solar facility expected to accelerate RIL’s growth in the renewable sector.
- Solar Market Growth: India’s solar capacity expected to reach 280GW by 2030, with substantial opportunities for exporters like Reliance.