Reliance foray in solar energy may soon face consequences

Reliance’s incursion in solar energy has wider consequences on the entire supply chain, Harshvardhan Dhole, Vice President, IIFL. Excerpts from an interview on RIL AGM, as reported by The Economic Times.

There were a lot of big announcements at the RIL AGM. Let us talk about the key takeaways and the new energy foray.

From a macro perspective, the diversification of Reliance Industries Ltd is a great step. This will make them more tech savvy and cut down their traditional O2C business by de-risking their revenue model. It will also help them improve their ESG frame work.

Secondly, India has been importing panel related equipment in order to convert them in solar module but now as Reliance Industries Ltd has made its incursion into Solar energy, this can have wider consequences in the supply chain. Now, the question stands on the sustainability of revenue models of several other companies too. But while Reliance Industries Ltd has made its integrated value proposition, this will bring a change in profit pool and industry’s structure which is quite a disruptive move.

While the energy business got a lot of attention this time, what are your takeaways from all the key business segments in Reliance Retail?
The revenue guidance by the chairperson yesterday implied that the CAGR will be between 35-45% over the next 3 to 5 years. However, the turbulence that is faced why the retail in the second wave, I really hope there is no third wave. Also the CAGR standing between 35-45% in next 3 to 5 years is definitely above the valuation that we were paying off for reliance retails. We are positively surprised.

What about the ultra affordable JioPhone Next? This is going to be the next fillip for Jio.

It seems quite promising. However, the supply chain is quite stretched due to the chip shortage, and one should keep in mind what’s happening globally. We would wait for pricing and bundling of plans because at the end of the day in order to benefit the JioMarket they will have to have a substantial market share.

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