Reliance’s fourth monetization wave.
Reliance Industries (RIL) is entering its biggest monetization cycle till date. Post Covid, the company had made huge investments of around $80 billion, and now brokerages and investors are looking at this as the fourth monetization wave. The company does not have any major debt pressure and the balance sheet is strong. The focus is only on 5G, AI-powered data centres, global refining and new energy, which will increase operating cash-flow.
Special features of the fourth wave
ET quoted a Morgan Stanley analyst as saying that this fourth wave is the fourth major monetization cycle of Reliance in the last 30 years. New investments, such as telecom, retail and oil-to-chemicals, will bring huge financial benefits to the company from 2026. This time, despite increase in capex, there will be no pressure on net debt. This means that Reliance can get returns from its investments directly in cash-flow.
JIO: Digital and 5G Dominance
Now the focus in Jio is on quality subscribers, increasing tariff and fixed wireless users. By FY27, Jio’s blended ARPU is estimated to reach around ₹236 per month. Along with this, the upcoming IPO and increasing share in the home broadband market will further strengthen the cash-flow of the company. Jio’s digital business is poised to make rapid profits from 5G technology and enterprise market.
Retail: Quick Commerce and Own Label
In the retail sector, Reliance has updated its stores and focused on quick commerce and its branded products. According to Morgan Stanley, retail sector revenues could reach around ₹3.9 lakh crore by FY27, and EBITDA growth would be around 100%. This is becoming a stable and long term profitable sector for the company.
A new turn in global refining
Reliance may see a new ‘Golden Age’ in global refining. With low new investment and existing capacity, the sector can deliver gross margins of $11-12 per barrel by 2027. Apart from refining, China’s supply-side reforms and recovery in chemicals will stabilize the company’s margins.
New Energy and AI: Preparing for the Future
The most futuristic part of the fourth monetization wave is the integration of AI and new energy. Reliance is expanding into 10 GW solar manufacturing chain, batteries, green hydrogen and AI-supported power solutions. The company will get high returns and stability in clean energy through GPU-as-a-service model in AI data center. The first earnings from the new energy venture are expected in FY27.
Morgan Stanley’s target for RIL
Brokerage firm Morgan Stanley has given overweight rating to RIL on the basis of the fourth monetization wave and has kept the price target at ₹ 1,701. The brokerage believes that the new investments will strengthen the group’s net asset value and cash-flow profile. If refining margins are better than expected and digital and new energy platforms are quickly monetized, returns could be even higher.