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Grey sky forms around Reliance's green energy unit

Grey sky forms around Reliance's green energy unit

Reuters21-07-2025
MUMBAI, July 21 (Reuters Breakingviews) - Rough weather awaits Mukesh Ambani's next big fundraising plan. On Friday, his $230 billion conglomerate outlined a goal to bring external investors, opens new tab into its clean power unit, which it tips as the next growth engine. Securing a valuation for the business that lives up to the hype may be challenging, however.
Reliance Industries (RELI.NS), opens new tab reported net profit of 269.94 billion rupees ($3.13 billion) for the three months to end June, a 78% year-on-year increase, propelled by gains from the sale of an investment. It does not yet provide any financial details for the new energy business, comprising a manufacturing complex in India's Gujarat state, covering land four times the size of Tesla's (TSLA.O), opens new tab Nevada gigafactory.
It's building what it calls the world's most integrated manufacturing ecosystem and the largest outside China, with capabilities ranging from component production to power generation and green chemicals. Jefferies analysts value the company's solar and hydrogen businesses together at $26 billion, roughly 9% of Reliance's sum-of-the-parts enterprise value. The Indian company also expects the venture will help reduce its own energy bill by at least a quarter.
Once these activities are operational in four to six quarters, external investors will be brought in. Reliance doesn't need the money, but it is common for renewable companies to tap investments from their current and future customers. It also echoes Ambani's playbook in 2020 when he enlisted A-list backers from Meta (META.O), opens new tab to KKR (KKR.N), opens new tab into his consumer and telecoms businesses.
If part of the goal is to firm up the new energy unit's valuation, the timing isn't great. Solar panel manufacturers in the U.S. are asking Washington to impose tariffs on products shipped from India, among other countries, especially those providing subsidies: Reliance's renewable power unit benefits from New Delhi's production-linked incentive scheme. This flagship manufacturing programme may now be allowed to lapse, Reuters reported in March, citing sources.
Even if that happens, Ambani's group is yet to make good on its commitment to take its telecoms and retail units public, leaving investors in those businesses waiting for exits. These are no small clouds in the company's blue sky forecast.
Follow Shritama Bose on Linkedin, opens new tab and X, opens new tab.
Reliance Industries on July 18 reported a 78% year-on-year increase in consolidated net profit to 269.94 billion rupees ($3.13 billion) for the three months ended June 30. The result was supported by a gain on the sale of its investment in Asian Paints.
The Indian conglomerate said it plans to "fully operationalize" its new energy unit in the next four to six quarters, and will then bring in partners who can contribute with both financing and offtake. The business will be a "self-funded platform" in the next few years, it added.
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