Reliance Industries shares get their highest price target from Nuvama on potential valuation re-rating

Shares of Reliance Industries Ltd., the Nifty 50 heavyweight, and the oil-to-telecom-to-retail conglomerate, are trading higher on Tuesday, July 1.Brokerage firm Nuvama Institutional Equities has reiterated its ‘Buy’ rating on RIL and raised its price target to ₹1,801, the highest on the Street, to factor in the potential for higher-than-expected solar module profits.

According to Nuvama’s market analysis, Reliance Industries has begun external sales of solar modules, which it forecasts could add 6% to profit and unlock a huge valuation upside, comparable to peers such as Waaree Energies and Premier Energies.

Huge valuation re-rating potentialWaaree’s solar module and cell capacity stand at 13.3 gigawatts and 5.4 gigawatts, while Premier’s are at 4 gigawatts and 3.2 gigawatts, with both commanding enterprise values of $10 billion and $6 billion, respectively.

In comparison, RIL’s fully integrated 20-gigawatt solar equipment manufacturing facility could support a much higher enterprise value.

Waaree and Premier currently trade at 14x and 15x FY27 estimated EV/EBITDA. If a similar 15x multiple is applied to RIL’s module business, it would imply a potential enterprise value of $20 billion, a re-rating catalyst similar to the valuation surge seen post-Reliance Jio’s launch in 2017, Nuvama said.
The brokerage added that RIL’s New Energy rollout could boost profit by over 50%, while also triggering a broader valuation uplift, including for its oil-to-chemicals (O2C) segment, as the company targets net-zero carbon emissions by 2035.O2C is RIL’s largest profit base currently, contributing two-fifths of EBITDA and more than half of attributable profit.

HJT module advantage

According to Nuvama, Reliance’s Heterojunction (HJT) solar modules, which are approved under the Approved List of Models and Manufacturers (ALMM), attract a premium of over 5%, compared to TOPCon modules and offer 23.1% efficiency.

Its 10 GW module/cell capacity is expected to add approximately ₹3,800 crore, contributing 6% to FY25 PAT.

Further integration into the upstream solar value chain, including wafers and polysilicon, offers additional upside, the brokerage said.

Going ahead, Nuvama said it will closely monitor updates at RIL’s upcoming Annual General Meeting (AGM), scheduled for August or September.

Of the 37 analysts covering Reliance Industries, 35 of them have a ‘Buy’ recommendation on the stock, while two others have a ‘Sell’ rating on the counter.

Shares of Reliance Industries Ltd. are currently trading 0.88% higher at ₹1,513.80. The stock has risen 24% so far this year.