New Delhi: Billionaire Mukesh Ambani-led Reliance Industries Ltd's plans for investing Rs 75,000 crore in solar, batteries, fuel cells and hydrogen could create valuation of $36 billion (Rs 2.6 lakh crore) for the new energy business, Wall Street brokerage Bernstein Research said in a report.
Reliance currently has three verticals — oil-to-chemical (O2C) business that houses its oil refineries, petrochemical plants and fuel retailing business; digital services that comprises telecom arm Jio; and retail including e-commerce. New Energy will be the fourth vertical.
At the company's annual general meeting of shareholders last month, Ambani announced a plan to invest Rs 75,000 crore in a new energy business over the next 3 years in the next stage in its transformation.
Under plans announced, the company will invest across solar, batteries and hydrogen to create an integrated clean energy ecosystem.
Other big announcements at the AGM were the launch of the new smartphone JioPhone Next and induction of Aramco chairman to the RIL Board, which is positive for the spin-off in O2C business.
"Clean energy has the potential to be value accretive if Reliance can pull it off," it said. "Based on capex for clean energy, we see a route to Reliance building a clean energy business, which could be worth $36 billion."
It put a valuation of over $69 billion for the O2C business, $66 billion for digital services and $81.2 billion for retail. Upstream oil and gas operations are worth another $4.1 billion. Other investments such as in the media and hospitality space are valued at $3.7 billion.
The entire conglomerate is worth over $261 billion.
"Many oil companies have tried and failed to become clean energy manufacturing companies and instead focus on clean energy production. Reliance's focus on manufacturing is distinctive and potentially offers higher margins but is also higher risk given their limited capabilities in clean energy," Bernstein said.
Reliance will need to find partners to work with them given the technology requirements needed for fuel cells and batteries.