Reliance Industries’ Strategic Vision 2024: AI, Green Energy, and a Generous Bonus Issue
Reliance Industries Ltd (RIL) continues to position itself at the forefront of India’s evolving business landscape, driven by innovation and a commitment to sustainability. The 47th Annual General Meeting (AGM) showcased RIL’s transformation into a deep-tech and new-age manufacturing powerhouse, with Reliance Jio Infocomm leading the charge in Artificial Intelligence (AI) and the New Energy business segment showing immense potential.
However, the lack of monetization plans for Reliance Jio Infocomm and Reliance Retail Ventures Ltd left some investors disappointed.
One of the standout announcements from the AGM was the roadmap for RIL’s New Energy business, which is expected to become as profitable as the company’s current Oil to Chemicals (O2C) segment within the next five to seven years. This business segment is projected to generate over Rs 60,000 crore in EBITDA by FY31, with the projects expected to be cash-flow positive from Day 1.
RIL has begun leasing land for generating 150 billion units (BU) of power in Kutch, while also building its own transmission infrastructure and securing sites at Kandla Port for green hydrogen and derivative logistics. Emkay Global highlighted that the New Energy segment’s earnings are expected to contribute significantly from FY28 onwards, maintaining a positive stance on RIL with a target price of Rs 3,335.
Jio is not just a telecom giant; it’s rapidly evolving into an AI powerhouse. Mukesh Ambani, RIL’s Chairman, emphasized the company’s vision of “AI Everywhere For Everyone,” aiming to democratize AI across India by making it affordable and accessible. RIL plans to establish gigawatt-scale AI-ready data centers in Jamnagar, powered entirely by its green energy. The company is collaborating with global partners to create the world’s lowest AI inferencing cost in India, ensuring that AI applications become more affordable.
JioAirFiber has already secured its first million customers within just 100 days, and the company aims to add another million homes every 30 days, targeting 100 million home broadband customers. Additionally, Jio’s 5G rollout has been nothing short of transformative, with over 130 million customers adopting Jio True 5G in just two years. JioTV, a new offering, promises a seamless entertainment experience by integrating live TV, on-demand shows, and apps like Amazon Prime Video and Disney+ Hotstar into a single platform.
Despite the excitement around new initiatives, the absence of concrete monetization plans for Reliance Retail and Jio left some analysts unimpressed. However, RIL’s financial roadmap reiterates its 2022 AGM target of doubling its value by 2027. The company also expects Retail and Jio to double their EBITDA between FY24 and FY28. The New Energy business is expected to match the profitability of the O2C segment in the next 5-7 years. Nuvama analysts estimate that RIL’s solar module production will begin later this year, with battery and electrolyser production starting by late CY25, suggesting a target price of Rs 3,786 for the stock.
In a move that could significantly boost market sentiment, RIL has announced its consideration of a 1:1 bonus share issue at the upcoming board meeting on September 5. This investor-friendly move is designed to enhance liquidity and make RIL shares more accessible to retail investors by effectively halving the current share price post-bonus. Issuing bonus shares sends a strong signal of the management’s confidence in the company’s future. It also reflects RIL’s ability to service the expanded equity base, further solidifying investor confidence.
Reliance Industries Ltd. is clearly positioning itself for a future dominated by AI and sustainable energy. While the AGM may have lacked “big bang” announcements, the company’s strategic initiatives in AI, New Energy, and connectivity underscore its long-term vision and commitment to driving growth. As RIL continues to innovate and expand, investors have every reason to remain optimistic about the company’s future prospects. For more FINANCIAL UPDATE please click here
Originally posted 2024-08-30 11:13:22.
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