![](\"https:\/\/im.rediff.com\/money\/2021\/jun\/24solar-energy.jpg?w=670&h=900\")
<\/p>\nEvery decade or so, Reliance Industries Ltd (RIL) sets on a new growth strategy, nudging the markets to value its stock price for newer businesses.<\/p>\n
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For the company’s latest energy initiative to expand its green energy and storage portfolio, some analysts are beginning to suggest a closer look at some of its segments.<\/p>\n
In his address to shareholders in the company’s FY22 annual report, billionaire Mukesh Ambani, chairman and managing director of the company, said: “The green energy value holds great promise to outshine all our existing growth engines in just 5-7 years.”<\/p>\n
The company has marked an investment of Rs 75,000 crore towards its new energy plans, which include solar energy value chain, green hydrogen, energy storage and other similar businesses.<\/p>\n
Of this, the solar modules business appears to be shaping up sooner than the other segments.<\/p>\n
Brokerage firm Jefferies in a December 5 note said: “Don’t ignore the renewable equipment business.”<\/p>\n
Analysts with Nuvama in an October 28 report noted, that their channel checks suggest RIL is inching closer to commissioning the first tranche of 5 gigawatt (Gw) module manufacturing capacity in the first quarter of the next financial year.<\/p>\n
Both brokerage firms suggest the new energy business merits further consideration.<\/p>\n
Jefferies in its note said, “We see little value being imputed to renewables in CMP (Current Market Price)”, noting they assign an underlying value of $18 billion to RIL’s solar business and $11 billion to the green hydrogen business.<\/p>\n
Nuvama has built a $12.3 billion base value for RIL’s new energy business in its SOTP (sum of the parts) calculation.<\/p>\n
Of this, the analysts said they value RIL’s modules business at $6 billion. In their October 28 report, they noted, “RIL’s venture in new energy shall unleash the next leg of growth and potentially re-rate its valuation, besides aiding its conventional business.”<\/p>\n
Morgan Stanley has assigned a $20 billion enterprise value in the SOTP calculation to RIL’s overall enterprise value for the target price.<\/p>\n
The brokerage firm, in its November 20 report, lists new energy as one of the catalysts that can surprise and drive outperformance in 2024.<\/p>\n
“NewEnergy\/Chemicals\/Digital monetisation to surprise and are not priced in the stock,” it said.<\/p>\n
Nomura, in its October 30 report, values the new energy business at $13 billion in its SOTP.<\/p>\n
Not everyone, however, is looking beyond the announced capital expenditure though. JM Financials and Kotak have held the new energy business enterprise value at the announced capex level, lower than $10 billion, in their October 28 and October 29 dated reports, respectively.<\/p>\n
RIL is yet to share more concrete details on the timelines of its new energy businesses.<\/p>\n
This segment has so far been missing from its analyst presentations made at the end of financial quarter reporting periods.<\/p>\n
According to RIL’s latest annual report of FY23, the company has made Rs 6,700 crore worth of investments or acquisitions related to the new energy business.<\/p>\n