Morgan Stanley sees $60 bn upside as RIL powers Gen AI with new energy push.
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Billionaire Mukesh Ambani could add up to $60 billion in market value for Reliance Industries Ltd (RIL) shareholders by integrating the company's new energy business with artificial intelligence (AI), according to Morgan Stanley Global brokerage firm Morgan Stanley sees significant potential for value creation as Reliance Industries Ltd (RIL) retools its sprawling Jamnagar energy complex to become India's AI infrastructure backbone. The move positions the conglomerate to capitalise on the artificial intelligence boom while addressing the global challenge of powering energy-intensive data centres.'Gen AI is the next frontier for RIL as it retools the Jamnagar energy complex to monetise its energy production – a key hurdle globally for Gen AI ramp-up,' Morgan Stanley said in its latest research report. 'We see potential for up to $60 billion in value creation from the new energy vertical as RIL uses the electrons to power chemicals, data centres, and refineries.'According to the company, Reliance views its New Energy business as 'more ambitious, far more transformational, and far more global in scope than anything it has ever done before.' The conglomerate is building Gen AI infrastructure in Jamnagar, which it plans to operationalise within two years. This includes a plan to power 1GW of data centre capacity using NVIDIA's cutting-edge Blackwell chips.Morgan Stanley estimates that a 1GW data center facility would require approximately 678,000 B100 chips. If Reliance allocates around 200MW for internal use, it would need roughly 135,000 B100 chips. When scaled up—a process that typically takes 4–5 years from startup—1GW of data center capacity would require approximately 1.3GW of round-the-clock power.During its Q3FY25 earnings call, Reliance shared more strategic insights, outlining its plans to capitalize on AI adoption trends by building a comprehensive national AI infrastructure. The company is already emphasising 'large-scale internal adoption of AI' and is actively embedding AI across all group-wide processes.Shares of RIL have surged 26% so far in the calendar year, reflecting growing investor confidence in Ambani's transformation strategy. Morgan Stanley remains overweight on RIL with a price target of Rs 1,617 per share, expecting a 14% earnings CAGR over F25–28."Investor focus on RIL's Gen AI investments is limited – earnings impact needs clarity. However, other energy/power players globally have re-rated on the strength of the Gen AI theme before earnings are realized," the brokerage noted.The firm values RIL's new energy business using a P/B multiple of 3x as it ramps up investments in solar supply chain, battery capacity expansion and progress in green hydrogen capacity. Morgan Stanley's bull case scenario value reaches Rs 2,034, while the bear case sits at Rs 1,210.The upcoming Q1 earnings should provide immediate momentum, with Morgan Stanley forecasting a rise in O2C earnings supported by very strong global fuel margins, partly cushioned by refinery maintenance. Retail revenue growth is expected at approximately 17% year-on-year with stable quarter-on-quarter margins.Telecom should show around 6.5 million subscriber net additions quarter-on-quarter with a slight increase in ARPU. Overall consolidated EBITDA should rise 16% year-on-year and consolidated earnings should surge 27%."Global pricing for panels has found a floor. Large players turned FCF-negative in 2024 and have seen increased capex and pricing discipline in the supply chain," Morgan Stanley observed. "The upcoming Jun-25 quarter (flat QoQ) should raise investor confidence in earnings delivery and quality, with refining, chemicals, and retail meeting expectations."The brokerage expects 14% earnings CAGR to be driven by O2C margins supported by lower feedstock prices and strong domestic demand, strong traction in consumer brands driving retail growth, and tariff hikes in telecom.
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