$100 bn wealth creation by Reliance Industries! Morgan Stanley's BIG forecast with RIL share price target

$100 bn wealth creation by mukesh ambani's reliance industries! morgan stanley's big forecast with ril share price target

Reliance Industries Share Price Target 2024: Mukesh Ambani backed conglomerate, Reliance Industries Ltd's market value might increase by up to USD 100 billion over its fourth monetisation cycle this century as new cash flow sources emerge and valuation multiples catch up, according to Morgan Stanley.

In the previous nearly three decades, the oil-to-telecom conglomerate's monetisation cycles have delivered 2-3x wealth creation for shareholders, with each decade generating USD 60 billion or more in market capitalization. RIL is in its fourth monetisation cycle this century.

Reliance Industries Share Price Target 2024

The brokerage firm Morgan Stanley said, while giving a target price of Rs 3,540 in the base case scenario.

Reliance Industries Share Price Today

Reliance Industries Limited shares opened up at Rs 3,129.95 on the BSE on 1 July, 2024. On the BSE, the stock was trading at a day high of Rs 3,157.55, and an intraday low of Rs 3,110.40. The company shares closed at Rs 3,120.35, down by 0.37 percent from the previous closing of Rs 3,131.85 on the BSE.

RIL's fourth monetisation cycle

"Monetisation 4.0 is different; it is supported by the business upcycle, domestic demand, and lower competition," the brokerage said. "RIL's fourth monetisation cycle (since 1997) should add up to USD 100 billion to USD 60 billion increase in market cap year-to-date."

RIL's market share increases, seamless integration, and, most crucially, capacity to exceed investor expectations each time the company reimagined its business have all contributed to its success. This monetisation comes after RIL invested USD 60 billion in 2021-23, the shortest investment cycle since the 1990s.

Investments in new energy, retail expansion to capture market share from the unorganised sector, and repurposing existing energy companies give a lengthy runway for continuous profits growth even beyond the next three years, assuming ROCE remains over 10%.

RIL earnings to grow at 12 per cent

Morgan Stanley expected the company's earnings to grow at 12 per cent CAGR over FY24-26 with tailwinds in earnings from all verticals. "We see RIL's ROE being higher than the cost of capital going forward as it is transitioning to a more profitable, sustainable, and less cyclical growth model due to changes in business as well as capital structure," it said.

It raised its multiples (in SOTP) by 0.5-1.0x to reflect this monetisation as RIL catches up with domestic and global peers that have seen the business upcycle and monetisation re-rate multiples by 30 per cent in the past year.

On what has changed and what is priced in, the brokerage 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."

"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," it added.

(With inputs from PTI)