Solar a Jio moment for Mukesh Ambani? Reliance shares get highest target price
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Betting that the production of solar modules could trigger a re-rating similar to what occurred in 2017 after the launch of Reliance Jio, domestic brokerage firm Nuvama has issued the highest target price of Rs 1,801 for Reliance Industries (RIL).At its recent analyst meet, RIL announced the start of its first line of HJT module manufacturing facility with a capacity of 1 GW, which can be scaled up in phases to a fully integrated 10 GW by early CY26.Nuvama's channel checks with key industry participants reveal that RIL has offered to sell its HJT modules in the lucrative domestic market, as the rollout of its power generation business is still some time away.'RIL's modules business (20 GW capacity) yields an EV of $20 billion, which could trigger a valuation re-rating for RIL, similar to the trend seen post-RJIO's launch in 2017. RIL's New Energy rollout will not only add over 50% to PAT but also re-rate valuations, including the O2C business, given its net-zero carbon target by 2035,' Nuvama analysts Jal Irani and others said in a note.O2C is currently RIL's largest profit base, contributing two-fifths of EBITDA and more than half of attributable PAT. In addition to integrated solar facilities, RIL plans to set up a 30 GWh battery facility. Green hydrogen and electrolyser manufacturing are on track, with the company announcing a technology tie-up with Nel ASA. The company also aims to set up 55 CBG plants.'Accordingly, watch out for the upcoming AGM in August/September. We are raising the SOTP-based target price to Rs 1,801—the highest on the Street—to factor in the potential for higher-than-expected module profits; we reiterate our 'BUY' rating,' Nuvama said.Calculations done by the brokerage show PAT from the New Energy segment (modules plus power) rising from Rs 20 billion in FY27E to Rs 114 billion by FY30E, implying a 140% CAGR over FY26–30E.'On our conservative assumptions, the New Energy share in PAT is expected to rise to 9% by FY30E. A faster ramp-up in capacity additions and utilisation could fuel more potential upside than our current numbers indicate. We believe additional businesses in the New Energy segment will also start contributing in a phased manner. This should enable RIL to meet its target of increasing PAT contribution from the New Energy segment to over 50% by 2030, as announced during the AGM in 2024,' it said.The note also drew comparisons with Waaree Energies and Premier, whose EVs stand at around $10 billion and $6 billion, respectively.RIL's 20 GW fully integrated solar equipment manufacturing facility could potentially translate into a much higher EV.Waaree and Premier are trading at 14x and 15x FY27E EV/EBITDA multiples, respectively. Ascribing a 15x EV/EBITDA multiple to RIL's modules business (20 GW capacity) yields an EV of $20 billion, which could trigger a valuation re-rating for RIL's stock—similar to the trend seen after RJIO's launch in 2017. RIL's New Energy rollout is expected not only to add over 50% to PAT but also to re-rate valuations across the business, including the O2C segment, given its net zero-carbon target by 2035, the brokerage said. RIL shares were trading 1.25% higher at Rs 1,519 on the BSE and are up over 24% so far in the calendar year 2025.
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