Reliance stand to gain the most from China's solar power churn: Morgan Stanley

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Reliance Industries Ltd. stands to benefit the most from China’s push to curb overcapacity from a gamut of industries, and the conglomerate’s own efforts to streamline its businesses, according to Morgan Stanley.

Morgan Stanley maintains an overweight rating on the Reliance Industries stock and raised its 12-month share price target to ₹1,701 from Monday's close of ₹1,602.(Reuters)

The company led by billionaire Mukesh Ambani “is the largest beneficiary of China’s anti-involution focus across energy and solar supply chains,” analysts including Mayank Maheshwari wrote in a note dated 1 September. “Reliance is going through self-anti-involution in consumer businesses and benefiting from China’s anti-involution drive in multiple ways—both of which are not priced in.”

The term “involution” in China refers to cutthroat competition with little payoff. “Anti-involution” describes moves by companies and policymakers to counter that trend, a shift that has supported equities as Beijing battles deflation.

Reliance is building out a fully integrated solar supply chain in India at a time when overcapacity is forcing China to rationalise its poly-silicon production. That could cut Reliance’s energy costs by as much as 40% by 2030 and lift new-energy earnings contributions to 13% by 2027, Morgan Stanley said.

“China’s anti-involution marks the bottom of the petrochemical cycle” and its efforts to tackle overcapacity in solar industry will aid pricing for Reliance’s solar supply chain, the analysts said. They estimate anti-involution efforts both in China and at the company adding $20 billion in net asset value and 17% to earnings estimate for fiscal year 2028.

Morgan Stanley maintained an overweight rating on the stock and raised its 12-month price target to ₹1,701 from ₹1,602, implying a 26% gain from Monday’s close. The current “valuations imply near zero value to new energy and AI investments with limited upside on FMCG growth,” the analysts said.

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