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Reliance Industries: Reiterates focus on high growth, scalable, new energy business

ICICIdirect Research 30 Aug 2022 DISCLAIMER

What's Buzzing

With a quest for accelerated and scalable growth, Reliance Industries (RIL) in its AGM, has reiterated its focus on green energy business across the entire spectrum of activities (battery storage, green hydrogen, power electronics, solar panel manufacturing, fuel cell system).

Context:

In its last years AGM, RIL announced its mega foray into new energy business by focusing on four pillars (gigafactory); namely a) photovoltaic panels, b) energy storage, c) green hydrogen, d) fuel cell systems. In the recently concluded AGM, the company added the 5th pillar (giga factory) in the form of a foray into power electronics.

Our Perspective:

The company, from the last AGM to this, has already made tangible progress on many of the pillars mentioned above. For instance, it has entered into strategic partnerships in energy storage battery domain, which includes: (1) Lithium Works (lithium iron phosphate (LFP) solutions), (2) Faradion (sodium-ion battery chemistry) and (3) Ambri. On the photovoltaic side, the acquisition of REC Solar is doing well. Further, the company plans to increase the capacity from 1.2 GW to 1.8 GW coupled with upgradation of technology with clear focus on staying ahead on the product tech curve. The cell and module capacity at Jamnagar is likely to commence operations from 2024, which will be a first of its kind quartz to module facility. Partnering with Stiedsdal will help in accelerating cost reduction of the green hydrogen while the company is also scouting for partnership in the field of gigawatt electrolyser manufacturing. We believe RIL is on the right track to diversify away from its conventional oil & gas business by creating an entire manufacturing ecosystem backed by strong technological partnerships and acquisitions. The key distinguishing factor of the company, typical attributes of its any new venture, is the scale at which it is aspiring to capture the entire green energy value chain coupled with strong technological backbone, which will ensure value creation for all stakeholders.

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