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Business Times
7 days ago
- Business
- Business Times
AI to send Asia's data centre spending and power needs up; Morgan Stanley picks the winners
[SINGAPORE] Data centre investments in Asia will likely double to US$200 billion by 2030, as the rising use of artificial intelligence (AI) will powers the demand for digital infrastructure and electricity, say Morgan Stanley analysts. In a report on Monday (May 26), the bank said the surge in capital expenditure is set to tighten regional power markets far sooner than previously expected. The analysts noted that power consumption across Asia is outpacing even the bullish forecasts, on the back of broader AI adoption, reshoring of supply chains, and a rise in advanced manufacturing. Morgan Stanley has thus raised its power-demand growth forecast by 30 basis points through 2030 – its second upward revision this year. Key markets such as China, Japan, Malaysia and Thailand are experiencing the sharpest growth; their data centres alone are expected to consume 100 gigawatts (GW) of electricity by 2030, accounting for a sixth of Asia's incremental power demand. Undervalued power-chain opportunities emerge In 2024, data centres accounted for around 1.5 per cent of the world's electricity consumption; power usage has grown at a 12 per cent compound annual rate since 2017. As AI applications broaden, this rise is expected to persist – bringing with it pressure on power infrastructure. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Morgan Stanley's analysts emphasised that natural gas will play a central role in powering AI, working in tandem with renewables. But they argue that markets have yet to fully price in the beneficiaries of the 'time-to-power' dynamic – given that grid operators and natural gas-fired plants can provide a reliable, dispatchable supply of electricity on shorter timeframes. The Morgan Stanley report also identified second-order beneficiaries, such as gas pipeline suppliers, amid rising US gas exports and regional energy needs. Infrastructure firms focused on clean-energy integration, grid modernisation, advanced cooling systems and battery storage are also expected to play increasingly critical roles. Notably, 2024 marked the return of pricing power for equipment manufacturers – a trend Morgan Stanley expects to extend downstream to generators, transmission operators and midstream providers. Asia powering AI-exposed stocks Morgan Stanley analysts have issued a string of 'overweight' calls on stocks expected to benefit from these trends in power demand. Equity analyst Mayank Maheshwari at Morgan Stanley has placed an 'overweight' call on integrated-energy provider Reliance Industries in India, and added a target price of 1,617 rupees, an upside of 13.3 per cent from its last close. He has also made an 'overweight' call on Malaysian grid operator Tenaga Nasional with a target price of RM16.30, a 16.4 per cent upside from its last market close. Single grid operators benefit from doubling power demand, he said. Hybrid power operators are likely to also gain from increased clean-power demand from data centres; analysts have placed an 'overweight' call on such players, including companies such as China Resources Power. But Maheshwari believes that the demand faced by Gulf Development will come from integrated data centres and its generation portfolio. He has raised the Thai company's target price by 43.8 per cent from its last close to 69 baht. Morgan Stanley analyst Eva Hou has placed an 'overweight' call on Chinese power grid equipment manufacturer Nari Technology, given that growth in demand for power demand requires enhanced grid capacity, thus favouring companies in this niche. Japanese gas turbine operator Mitsubishi Heavy Industries was also given an 'overweight' call. Morgan Stanley analyst Yoshinao Ibara projected that higher demand for gas baseloads would drive turbine sales. However, he lowered Mitsubishi's target price by 6.5 per cent to 3,000 yen.
Economic Times
29-04-2025
- Business
- Economic Times
Reliance Industries shares at inflection point. 6 reasons why FY26 could be the year of big re-rating
Six triggers that could re-rate RIL shares in FY26: Live Events 1) Telecom: Monetisation moves, tariff heat rising 2) New energy: Green dreams, real deliveries 3) Oil-to-Chemicals (O2C): Old engine, new fire 4) Retail: Revival mode activated 5) Valuations: Room to run 6) Value unlocking: Big bang updates at AGM? (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel After 3 years of playing second fiddle, India's most valuable stock is ready to steal the show again. Shares of Nifty heavyweight Reliance Industries Ltd ( RIL ) have already climbed over 12% in calendar 2025, and analysts say the old warhorse is saddling up for a full-blown re-rating as FY26 shapes into a potential inflection Q4 results, which crushed Street expectations, were just the opening act. Brokers are now pegging targets as high as Rs 1,720 as against Monday's closing price of Rs 1,368, and the mood on the Street is shifting fast. RIL's transformation from a predominantly energy-centric empire to a digital and consumer-focused behemoth is now undeniable."RIL's transition to a new energy company is starting to bear fruit and we think it is back on an earnings growth path after flattish earnings in FY25. We expect a re-rating to follow this growth," Morgan Stanley analyst Mayank Maheshwari said, setting the much of the past two-three years, RIL's colossal businesses seemed fully priced, with little spark for earnings expansion. But as FY26 approaches, the old equations are breaking down and six big triggers are lining up to power a fresh days of heavy Jio capex are fading into the rearview mirror. Citi noted that capex likely peaked in FY24 with the completion of 5G rollouts, and intensity should now Jio is flexing its pricing muscle. "The recent tariff action indicates the shift in its stance towards monetisation and improves visibility on future tariff hikes," Citi Stanley sees ROCE rising 300 basis points to 9% by FY28, powered by tariff hikes and a higher mix of fixed wireless subscribers (with 2-3x higher ARPUs). Goldman Sachs expects another tariff hike in 2H that should propel Jio's EBITDA growth to 23% in on the other hand, said: 'Over FY25-27, we expect Jio's ARPU to rise at a 13% CAGR to Rs 251, led by two tariff hikes of 10% each."RIL's green energy ambitions are morphing from PowerPoint slides into production lines. Morgan Stanley said the new energy business has started with a 1GW line and will be fully integrated with a 10GW capacity by firm believes there's up to ₹100/share of value creation potential that markets haven't priced in yet. Expansion into polysilicon-to-module manufacturing, lithium-ion phosphate battery plants, and green hydrogen production near Kandla are all moving at is racing ahead on green hydrogen too, using NEL's alkaline electrolyzers, and aims to slash costs through mega-scale production on a 2,000-acre count out the old cash cow yet. Morgan Stanley projects a 13% earnings CAGR in the O2C include growth in domestic fuel retail, which is already raking in $300 million in annual EBITDA, and sweetening Middle East crude discounts. Chemicals margins could also benefit as China slaps tariffs on US a decade of pause, RIL is ramping up PET and PVC capacity — a move that will be integrated with new U.S. ethane imports. Delivery of new ethane ships begins 2H26, setting up a 12-13% ROCE for chemical expansions despite some initial oversupply in caustic Stanley expects the retail business' topline growth to revert to a solid 17% CAGR between FY25-FY28. It could help re-rate multiples in consumer retail and add up to Rs57/share to RIL's SOTP valuation, according to the brokerage include traction in new fashion brands, consumer packaged goods, and the pivot into 30-minute quick-commerce grocery Stanley said RIL's consumer brands business posted a topline of $1.4 billion in FY25 — about 8% of retail net revenues — but remains Sachs forecasts 1QFY26 and FY26 retail EBITDA growth of 19% and 15%, respectively, putting RIL back on the growth investor the 12% YTD rally, RIL's valuations still leave plenty of Sachs noted the stock is trading close to 1SD below its historical mean EV/EBITDA multiple, near their bear-case valuations across all major businesses. "We continue to see favourable risk-reward... Maintain Buy with revised 12-month SOTP-based TP of ₹1,645," the brokerage Morgan is similarly bullish: "RIL valuations imply a ~25% holding company discount for its major subsidiaries. Continued strength in Retail and higher telecom tariffs could drive share price higher," it said, pegging a new March-26 price target of ₹1,530 — implying an 18% Street is bracing for fireworks at RIL's upcoming AGM.A potential IPO or stake monetisation for Jio Platforms could unlock massive value. HSBC said Jio is poised to monetise a further stake to bring down net debt and "discover value for its existing private investors" who came on board during the 2020 fundraising spree.: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of The Economic Times)
Time of India
29-04-2025
- Business
- Time of India
Reliance Industries shares at inflection point. 6 reasons why FY26 could be the year of big re-rating
After a period of underperformance, Reliance Industries Ltd. (RIL) is poised for a re-rating in FY26, driven by strong Q4 results and a shift towards digital and consumer-focused ventures. Analysts predict significant upside, fueled by telecom tariff hikes, green energy initiatives, and a retail revival. Potential value unlocking through Jio Platforms could further boost RIL's stock. Tired of too many ads? Remove Ads Six triggers that could re-rate RIL shares in FY26: Tired of too many ads? Remove Ads 1) Telecom: Monetisation moves, tariff heat rising 2) New energy: Green dreams, real deliveries Tired of too many ads? Remove Ads 3) Oil-to-Chemicals (O2C): Old engine, new fire 4) Retail: Revival mode activated 5) Valuations: Room to run 6) Value unlocking: Big bang updates at AGM? After 3 years of playing second fiddle, India's most valuable stock is ready to steal the show again. Shares of Nifty heavyweight Reliance Industries Ltd ( RIL ) have already climbed over 12% in calendar 2025, and analysts say the old warhorse is saddling up for a full-blown re-rating as FY26 shapes into a potential inflection Q4 results, which crushed Street expectations, were just the opening act. Brokers are now pegging targets as high as Rs 1,720 as against Monday's closing price of Rs 1,368, and the mood on the Street is shifting fast. RIL's transformation from a predominantly energy-centric empire to a digital and consumer-focused behemoth is now undeniable."RIL's transition to a new energy company is starting to bear fruit and we think it is back on an earnings growth path after flattish earnings in FY25. We expect a re-rating to follow this growth," Morgan Stanley analyst Mayank Maheshwari said, setting the much of the past two-three years, RIL's colossal businesses seemed fully priced, with little spark for earnings expansion. But as FY26 approaches, the old equations are breaking down and six big triggers are lining up to power a fresh days of heavy Jio capex are fading into the rearview mirror. Citi noted that capex likely peaked in FY24 with the completion of 5G rollouts, and intensity should now Jio is flexing its pricing muscle. "The recent tariff action indicates the shift in its stance towards monetisation and improves visibility on future tariff hikes," Citi Stanley sees ROCE rising 300 basis points to 9% by FY28, powered by tariff hikes and a higher mix of fixed wireless subscribers (with 2-3x higher ARPUs). Goldman Sachs expects another tariff hike in 2H that should propel Jio's EBITDA growth to 23% in on the other hand, said: 'Over FY25-27, we expect Jio's ARPU to rise at a 13% CAGR to Rs 251, led by two tariff hikes of 10% each."RIL's green energy ambitions are morphing from PowerPoint slides into production lines. Morgan Stanley said the new energy business has started with a 1GW line and will be fully integrated with a 10GW capacity by firm believes there's up to ₹100/share of value creation potential that markets haven't priced in yet. Expansion into polysilicon-to-module manufacturing, lithium-ion phosphate battery plants, and green hydrogen production near Kandla are all moving at is racing ahead on green hydrogen too, using NEL's alkaline electrolyzers, and aims to slash costs through mega-scale production on a 2,000-acre count out the old cash cow yet. Morgan Stanley projects a 13% earnings CAGR in the O2C include growth in domestic fuel retail, which is already raking in $300 million in annual EBITDA, and sweetening Middle East crude discounts. Chemicals margins could also benefit as China slaps tariffs on US a decade of pause, RIL is ramping up PET and PVC capacity — a move that will be integrated with new U.S. ethane imports. Delivery of new ethane ships begins 2H26, setting up a 12-13% ROCE for chemical expansions despite some initial oversupply in caustic Stanley expects the retail business' topline growth to revert to a solid 17% CAGR between FY25-FY28. It could help re-rate multiples in consumer retail and add up to Rs57/share to RIL's SOTP valuation, according to the brokerage include traction in new fashion brands, consumer packaged goods, and the pivot into 30-minute quick-commerce grocery Stanley said RIL's consumer brands business posted a topline of $1.4 billion in FY25 — about 8% of retail net revenues — but remains Sachs forecasts 1QFY26 and FY26 retail EBITDA growth of 19% and 15%, respectively, putting RIL back on the growth investor the 12% YTD rally, RIL's valuations still leave plenty of Sachs noted the stock is trading close to 1SD below its historical mean EV/EBITDA multiple, near their bear-case valuations across all major businesses. "We continue to see favourable risk-reward... Maintain Buy with revised 12-month SOTP-based TP of ₹1,645," the brokerage Morgan is similarly bullish: "RIL valuations imply a ~25% holding company discount for its major subsidiaries. Continued strength in Retail and higher telecom tariffs could drive share price higher," it said, pegging a new March-26 price target of ₹1,530 — implying an 18% Street is bracing for fireworks at RIL's upcoming AGM.A potential IPO or stake monetisation for Jio Platforms could unlock massive value. HSBC said Jio is poised to monetise a further stake to bring down net debt and "discover value for its existing private investors" who came on board during the 2020 fundraising spree.: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of The Economic Times)
