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CY24 AGM – Deep-tech makeover, new energy takes center-stage

RIL’s CY24 AGM highlighted its makeover into a deep tech and new-age manufacturing entity, with Jio leading the AI charge and being embedded in every segment. The financial roadmap reiterating RIL’s CY22 AGM target of doubling in value by CY27 (golden decade), besides Retail and Jio also doubling their EBITDA between FY24 and FY28, were other key takeaways (we build in 70-90% growth). However, a key notable was the chairman indicating New Energy becoming as big and profitable as O2C over coming 5-7 years (ie >Rs600bn EBITDA by FY31 and projects being CF-positive from Day-1). Besides the progressive start of gigafactories starting end-FY25, RIL has leased land for generating 150BU of power in Kutch, started building its own transmission infra, and secured sites at Kandla Port for green H?/derivative logistics. No update on Retail or Jio monetization, though, was a dampener. While execution is key, we believe ‘New Energy’ segment earnings would contribute meaningfully FY28 onward. Overall, we view the AGM KTAs constructively and maintain a positive stance on RIL; retain ADD and TP of Rs3,335.

New Energy roadmap promising; can contribute materially FY28 onward

The Chairman reiterated commissioning of solar PV module production by FY25-end which would become integrated (right from polysilicon) in the subsequent Quarters with 10GWpa initial capacity (20GWpa by CY26, as stated in the AR). It would commence production of the 30GWhpa integrated (incl chemicals) battery unit (BU) from H2FY26; being modular, this BU can be expanded at multiples of 30GWh, to cater to both— domestic and global ESS demand. Work has also started on the multi GW electrolyzer manufacturing facility on the West Coast which would be ready by FY27 (2026, stated) and which could support ALK, PEM, and AEM technologies. RIL is on track to invest Rs750bn on factories. The Kutch RE site (~250km from Jamnagar) implies ~60GW capacity; RIL targets a phased sale of power FY27 onward, on RTC basis. In the first 5- 7 years, captive needs would be met (150bn KWh required at the company level by early next decade for net-zero); going ahead, RIL would seek global offtake agreements.

Retail–Jio earnings guidance encouraging; new petchem capacities from FY27

Guidance on the EBITDA doubling for consumer businesses in the next 3-4 years (FY24- 28) is encouraging, given our estimate being ~70% and ~90% higher for Retail and Jio, respectively. This implies further ARPU growth, besides subscriber additions in Jio and Retail also picking, given a weak Q1FY25, though we maintain our estimates for now. In O2C, the Chairman gave an update on petchem expansion projects, with 1.5mmtpa of PVC at Dahej and Nagothane, 1mmtpa of polyester capacity coming by FY27, and 3mmtpa backward integrated PTA by FY28. Three more VLECs are being added to the existing fleet of six. Its carbon fiber plant at Hazira is also under construction.

Valuation

We retain our estimates and target price, though there is upside risk to the tune of 15- 20% in valuation, based on the AGM commentary if execution is flawless, and timelines are met. The company targets ensuring its balance sheet remaining robust.

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