Reliance shares can create up to $100 billion wealth, Morgan Stanley predicts. Should you invest?
Morgan Stanley said that monetisation 4.0 is different from previous monetisation owing business upcycle, domestic demand and lower competition.
Morgan Stanley said that Reliance Industries Ltd (RIL) can add up to $100 billion to it market capitalisation (m-cap) in its fourth monetisation cycle this century as new cash flow streams emerge and valuation multiples catch up. The foreign brokerage said that monetisation 4.0 is different from previous monetisation as it is supported by the business upcycle, domestic demand and lower competition. The monetisation cycles have delivered 2-3 times value creation for RIL shareholders in the past nearly three decades, it said.
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"This monetisation follows the $60 billion in investments in 2021-23, which was the shortest investment cycles since 1990s for RIL. Investments made in new energy, retail expansion to take market share from the unorganised sector, and repurposing of existing energy businesses provide a long runway to deliver earnings growth consistently even beyond the next three years should ROCE be sustained above 10 per cent," Morgan Stanley said.
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Forecasting, a 12 per cent earnings per share (EPS) growth, compounded annually over FY24-27 with multiple triggers across verticals, it said, "We reflect recent telecom tariff hikes, oil prices, and refining margins, and raise our EPS estimates fractionally for 2025, by 7 per cent for 2026, and by 8 per cent for 2027. Our price target rises to ₹3,540, from ₹3,046. RIL has been a "show me" story for the past decade and has seen significant market cap inflection once new revenue streams such as new energy, higher telecom tariffs/chemical margins have been delivered."
