Bernstein bullish on Reliance Ind, sets a price target of ₹3,040

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Reliance Industries The new energy push may be the winner even before the period you set to achieve its goal. While the company has set itself a 15-year vision to build Reliance as one of the world’s leading manufacturers of new energy and new materials at its 43rd Annual Meeting in 2020, global advisory firm Bernstein says Reliance Industries Ltd (RIL) could generate $10 billion in revenue. dollars from new energy business in 2030, which is 40 percent of the total available market (total).

RIL has announced its foray into clean energy with a $2 trillion investment in India to 2050. “Our new energy business will be a perfect blend of reliable, clean and affordable energy solutions using hydrogen, wind, solar, fuel cells and batteries. We are committed to helping India lead In the future of new green energy and bridging the green energy gap in India and the world.

India targets 280 GW solar capacity and 5 million tonnes of green H2 production by 2030. “We expect EV penetration to be 5 percent for PV and CV, and 21 percent for two-wheelers. The value of clean energy could reach to $30 billion in 2030 (currently $10 billion).By 2050, we estimate that TAM could reach $200 billion and cumulative spending $2 trillion, says the Bernstein report.

Lots of scope

The clean energy business, which “represents a new growth pillar for Reliance” comes with “significant room for expansion over time,” the report says. The report adds, “By 2030, we estimate that RIL could capture 60 percent, 30 percent and 20 percent of total solar, battery and hydrogen energy, respectively.”

“At Reliance, we have set an ambitious target of achieving net zero carbon by 2035 and are investing more than $10 billion (Rs. 75,000 crore in 2020) in building the most comprehensive ecosystem of new energy and new materials in India,” the company’s web site says about the energy business. new. It has invested Rs 15,000 crore in value chain, partnerships and future technologies, including upstream and downstream industries, to create an integrated and inclusive renewable energy ecosystem.

RIL plans to install 100 GW of solar capacity by 2030,” which is 35 percent of the country’s 280 GW capacity target, but an additional 50 percent share. O2C (Demand to Cash) continues to tap into Russia’s low-cost raw materials , while product prices remain strong. The Urals are trading at a 20-25 percent discount to the Dubai oil price, resulting in an additional $6-8/bbl spread on refining margins,” the report explains.

Bernstein estimates that O2C could achieve EBITDA in FY24 of Rs 63,000 crore (+1 percent YoY), which is in line with market estimates. However, the main risk, according to the global advisory firm, is “a recession leading to a sharp decline in margins next year.”

The report adds that financing is not an issue for RIL given the current balance sheet and FCF’s outlook. Reliance aims to fund future capital expenditures from OCF and keep net debt to EBITDA below 1x (0.6x in FY23). FCF will turn positive in FY24 and reach Rs 1 trillion crore by FY27,” the report read, adding: “We rate Reliance Industries an outperformer with a price target of $3,040 with upside potential of 22 percent. Our FY24 EPS of Rs 132 is 13 per cent above consensus estimate.”