Mukesh Ambani wants to double RIL size by FY30. What it means for 44 lakh shareholders

Asia's richest billionaire Mukesh Ambani’s ambitious target to double Reliance Industries' massive Rs 19 lakh crore empire by FY30 has positioned 44 lakh shareholders of the bluechip Nifty stock for what analysts are calling a re-rating opportunity.

The oil-to-telecom conglomerate's ambitious roadmap comes at a critical juncture, with RIL shares already surging 16% this year after disappointing investors in 2024. All eyes are now on the upcoming Annual General Meeting (AGM) on August 29, where Ambani is expected to unveil strategic announcements that could unlock substantial shareholder value.

Despite mixed quarterly results in the June quarter, RIL management painted an optimistic picture for future growth prospects, expressing confidence in doubling EBITDA across the entire group by 2029-30. The company has reaffirmed growth guidance calling for doubling earnings within 3-4 years for both Jio and Retail segments, the twin engines expected to drive almost all future growth.

“We expect Reliance's consolidated Ebitda to improve significantly in the near future, led by increasing share of Jio and Retail. The stock is trading in a narrow range to its conservative valuation, which builds in a depressed valuation for each of its business units. Strong growth momentum in Jio led by tariff hikes, along with steady streamlining of retail operations allowing for a recovery in its growth momentum in the next few quarters will drive a significant upside for the stock,” CLSA’s Vikash Kumar Jain said.

The company's target to double the size of its Jio and Retail businesses along with ramp-up in new energy business to the size of its O2C business bode well for its overall aim of doubling Reliance's size by the end of FY30, he said in a recent note.

The global brokerage, which has an outperform call on RIL with a target price of Rs 1,650, believes that in an otherwise extended valuation of the Indian market, Reliance’s conservative valuation makes it an attractive bet for most largecap portfolios.

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Dalal Street backing the Ambani vision

Major investment banks are rallying behind the transformation story. Pointing out that Reliance Retail and telecom now account for about 54% of total FY25 consolidated EBITDA, it said these will account for almost all of the net EBITDA growth over the next three years.

The brokerage expects RIL to deliver positive free cash flow despite elevated capex plans, with a target price of Rs 1,695. Recent company guidance of maintaining net debt to EBITDA of less than 1x also signals strong cash generation ahead.

While projecting FY25-28 earnings CAGR at 13%, Goldman Sachs sees re-rating drivers in all of Reliance's businesses. It expects traction in new fashion brands, quick commerce and own consumer brands to drive Reliance Retail topline growth to 17%.

HSBC, which upgraded RIL to Buy after four years, maintains its positive stance with a target price of Rs 1,630, citing "potential catalysts in the form of a turnaround of retail, the start of the new energy business and a pick-up in momentum in the digital business."

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New energy: The 3rd growth pillar

The new energy vertical emerges as a critical component of Ambani's doubling strategy. Nomura believes the new energy business could be the next growth driver for RIL, with the company targeting world-leading scale in integrated solar solutions and ESS battery manufacturing and implementation.

Goldman Sachs notes that new energy has started with 1GW line and will be fully integrated with 10GW capacity by 2026 from polysilicon to panels, eventually delivering lower power costs for energy and datacenter infrastructure. Captive consumption of green energy could result in approximately 25% energy cost reduction for the group.

Multiple catalysts are aligning to support the doubling thesis. Flow-through of recent tariff hikes for Jio, recovery in retail's growth momentum, and Jio Airfiber-led positive momentum in broadband subscribers are expected to drive near-term improvements.

The start of new energy projects and a possible IPO of Jio emerge as key triggers over the next 12-15 months, with investors closely monitoring for strategic announcements at the August 29 AGM.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)