Arguing that powering artificial intelligence (AI) remains the most underappreciated vertical at Reliance Industries (RIL), Morgan Stanley believes it is rapidly emerging as the next major value driver for Mukesh Ambani\u2019s conglomerate, with the potential to reshape the stock\u2019s equity story over the next decade.<\/p>\n
In a fresh note, Morgan Stanley analysts, including Mayank Maheshwari, say recent comments from RIL\u2019s chairman and policymakers \u201cpoint to a runway of NAV creation as large as 15% of RIL\u2019s NAV\u201d from the AI infrastructure opportunity alone.<\/p>\n
The brokerage noted that \u201cAI economics point to ~12\u201314% ROCE\u201d as Reliance leverages deep partnerships with Meta, Google, and Microsoft, while executing a multi-gigawatt data centre build-out anchored by low-cost renewable power and in-house battery solutions. <\/p>\n
\u201cReliance has reinvented itself every decade, and AI is set to reshape its equity story,\u201d the report said, adding that generative AI deployment \u201cenables large-scale capital deployment while unlocking value creation with synergies across energy, digital, consumer, and media verticals.\u201d <\/p>\n
The brokerage retained Reliance Industries as a top pick, maintaining an Overweight rating and an unchanged price target of Rs 1,803, implying a 24% upside from the February 6 close of Rs 1,451.<\/p>\n
Central to the thesis is a capex-heavy push into hyperscale computing. Morgan Stanley estimates that Reliance will invest $12\u201315 billion in AI infrastructure to build a 1GW data centre, assuming $0.8 million per MW for the powered shell and related infrastructure, with the remainder spent on chips. Of this, the brokerage expects RIL to underwrite around 25% of the compute capacity, translating to roughly $7 billion in infrastructure and $5 billion for 250MW-equivalent AI chips to be deployed directly by Reliance. <\/p>\n
The remaining 75% of capacity could be monetised as Data Centre as a Service for hyperscalers and large model providers, with indicative annual revenues of $1.5\u20131.6 million per MW, the note says. For a 100MW block, Morgan Stanley\u2019s model estimates revenues of $822 million, EBITDA of $743 million, a 31% net margin, 12.2% ROCE, and 18.3% ROE, underscoring what it describes as attractive \u201cAI data centre infrastructure and inference economics,\u201d even before accounting for tax incentives. <\/p>\n
The brokerage adds that the macro and policy environment is unusually supportive. \u201cThis, along with the 20-year tax holiday for hyperscalers in India\u2019s recent Budget and GPU sourcing from the US under the India\u2013US trade framework, supports a significant acceleration of the \u2018Powering AI\u2019 story,\u201d it said. <\/p>\n
Putting the scale in context, Morgan Stanley estimated that India would need ~9GW of AI DC power by 2030, compared to China and the US at ~48GW and ~102GW,\u201d with Malaysia \u2013 which has rolled out similar tax incentives \u2013 already having \u201c~8GW of capacity for datacenters in the works. <\/p>\n
On the demand side, Morgan Stanley expects AI compute in Asia ex China to be \u201cpowered by gas and batteries,\u201d with about 50GW of new coal and gas based generation through 2030, backed by renewables as gas markets stay oversupplied. China\u2019s compute build out, by contrast, is projected to be met \u201clargely by renewables and batteries as unit economics improve,\u201d while affordability remains \u201ctop of mind for policymakers.\u201d<\/p>\n
Reliance\u2019s integrated energy and new energy businesses are positioned as key enablers of this AI build out. The report flags that data centres are \u201cunlocking new demand in Energy Storage Systems (ESS)\u201d as gas turbine shortages and grid constraints force operators toward \u201calternative, fast deployable power solutions.\u201d It points to 2026 as a potential \u201cinflection point where ESS becomes a viable mainstream component of datacenter power architecture,\u201d and notes that RIL \u201cin the recent call upped its LFP cell pack\/battery production capacity to 100GWh vs. 30GWh previously.\u201d<\/p>\n
Given that data centres are \u201csignificant energy consumers,\u201d Morgan Stanley argued that the Reliance can \u201cunderwrite more than 20GW of internal power demand, supporting 100GW of its solar panel capacity and 30-40GWh of its own battery capacity.\u201d In solar, it highlights that while \u201cthere is oversupply in India on solar panel manufacturing capacity, there are limited integrated manufacturers like RIL,\u201d which is planning an integrated polysilicon to module chain scaling to 20,000 tonnes of polysilicon and 20GW each of ingots, wafers, cells, and modules by FY28.<\/p>\n
The digital partnership layer is the other critical pillar. \u201cGoogle Cloud is partnering with RIL to offer generic AI solutions to enterprises, while RIL also plans to offer its own AI agents built on Google Enterprise,\u201d the report noted.<\/p>\n
On the consumer side, the Google RIL tie up will see Jio subscribers offered \u201caccess to Google\u2019s Gemini Pro AI model, 2TB of cloud storage and other functionalities,\u201d with 5G AI add on plans starting at \u201cRs51\/month\u201d for existing 4G customers. Morgan Stanley also points to RIL\u2019s strategic tie ups \u201cwith Meta, Google and Microsoft\u201d and its plan to provide \u201cAI as a service to subscribers\u201d while building \u201cmulti gigawatt datacenters,\u201d arguing that these partnerships de risk both technology and utilisation risk.<\/p>\n","protected":false},"excerpt":{"rendered":"
Arguing that powering artificial intelligence (AI) remains the most underappreciated vertical at Reliance Industries (RIL), Morgan Stanley believes it is rapidly emerging as the next major value driver for Mukesh Ambani\u2019s conglomerate, with the potential to reshape the stock\u2019s equity story over the next decade. In a fresh note, Morgan Stanley analysts, including Mayank Maheshwari, say recent comments from RIL\u2019s chairman and policymakers \u201cpoint to a runway of NAV creation as large as 15% of RIL\u2019s NAV\u201d from the AI infrastructure opportunity alone. The brokerage noted that \u201cAI economics point to ~12\u201314% ROCE\u201d as Reliance leverages deep partnerships with Meta, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7],"tags":[],"class_list":["post-991162","post","type-post","status-publish","format-standard","hentry","category-it-2"],"acf":[],"_links":{"self":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/991162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/comments?post=991162"}],"version-history":[{"count":0,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/991162\/revisions"}],"wp:attachment":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/media?parent=991162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/categories?post=991162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/tags?post=991162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}