RIL shares: What CLSA says on Reliance's new energy segment ahead of AGM

Ahead of Reliance Industries Ltd (RIL) annual general meeting (AGM) later today, CLSA said even as RIL's planned capex of Rs 75,000 crore in the New Energy segment should pick up from 2024, the Mukesh Ambani-led company stated in its FY23 annual report that upon validation of feasibility of these initiatives at scale, it is prepared to double its commitment.

CLSA said FY23 saw some basic action in the new energy segment as RIL, in partnership with Ashok Leyland, introduced India’s first hydrogen-powered commercial vehicle and set up the first hydrogen refuelling system. RIL's retail fuel marketing joint venture (JV) with British Petroleum (Jio-BP) has set up 1,400 EV charging and battery-swapping facilities across eight cities, CLSA noted adding that the JV has also signed MoUs with Mahindra and Piaggio to explore development of EV products and services.

"Having got into the right technology partnerships, capex should pick up from 2024 with visible new energy additions coming in from FY25. If viability and scale is proven, Reliance has claimed that it could double its planned investment of Rs750bn. The upcoming AGM may provide more detail," the foreign brokerage said while suggesting a target price of Rs 3,060 on the stock.

CLSA said the second year of new energy saw Reliance Industries make three more stake acquisitions to beef up its capabilities in new energy and small initial action in some areas. The FY23 annual report, it said, reiterated its target to commission 10GW of solar PV capacity by 2024 and 20GW by 2026. Besides, it has maintained its target of 5GWh battery capacity by 2024 and 50 GWh by 2027.

"Its target to enable solar power generation (including EPC) of 100GW by 2030 (20GW by 2025) implies 36 per cent market share of India’s solar capacity target of 280GW by 2030. If viability and scale is proven, Reliance has claimed that it could double its planned investment of Rs750bn," CLSA said.

CLSA said the last financial year saw three more acquisitions worth $50 million to add to its new energy capabilities. This raised cumulative investments in this area to $800 million. Reliance acquired a 20 per cent stake in Caelux Corporation, which is engaged in development of perovskite-based solar technology that improves performance of new crystalline silicon modules to make them more powerful and cost-effective.

"While Reliance is confident of raising efficiency of solar panels at REC (its Norway-based 100 per cent subsidiary) from current 23 per cent to 26 per cet, it hopes to use Caelux’s perovskite technology to raise this to 28 per cent. During the year, Reliance also acquired 79.4 per cent of California-based SenseHawk, which provides software-based management tools for the solar energy generation industry," CLSA noted.

Reliance also acquired a stake in Bangalore-based AltiGreen, which is an EV technology and solutions provider for commercial last-mile transport through.

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