Morgan Stanley Sees 20% Upside For RIL Due To Hydrogen Boost

Morgan Stanley

  • Reiterates ‘Overweight/In-Line’ on the stock and raises target to Rs 3,253 from Rs 2,926; an implied return of 19.66%.
  • Emergence of bigger, newer markets for solar panels and electrolyzers will help fund the growth of RIL’s new energy business.
  • Electrolyzers, which form one of the four gigafactories that RIL is building, have become a necessity in the energy transition.
  • Expects 10% boost for RIL’s net asset value (NAV), in anticipation of quicker hydrogen monetisation.
  • Estimate hydrogen business can achieve 14-15% RoCE for the company, on par with oils-to-chemicals operation.
  • Demand for RIL’s solar panels will increase with the evolution of green hydrogen ecosystem.
  • India’s 2030 hydrogen production target would absorb the 100 Giga Watt cumulative solar panel capacity that RIL aims to achieve.
  • Possibility of monetisation of petcoke gasifiers as hydrogen demand rises, and export potential of green/blue hydrogen is likely to support multiples.
  • Value-creation potential from the global pivot on energy security and the energy transition remains highly underappreciated for RIL.
  • Firm remains well-equipped and funded for new energy investments.

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