Reliance Industries riding high on ESG sentiment.

Reliance Industries Ltd, the oil to retail conglomerate is big on green energy push with back to back acquisitions and partnerships. 

Reliance Industries, the Rs 18.05 lakh crore market capitalization company, is one of the main drivers of the bull sentiments on the bourses.

The stock has given a price return of 14.23% in the past month fueled by its acquisition spree.

As the world is moving towards green energy to reduce carbon footprints, investors are increasingly screening companies on their ESG compatibility. Reliance is showing its resilience to go green.

“Our world has only one option: rapid transition to a new era of green, clean and renewable energy.” The visionary Mukesh Ambani spoke at the 44th AGM of RIL. He pledged to invest Rs 75,000 crore in the next three years to set up a solar manufacturing unit facility, a battery factory to store energy, a fuel cell-making factory and an electrolyser unit to produce green hydrogen as a part of the business. The new investments are meant to pivot the conglomerate to cleaner fuels.

Here’s a brief note of the recent green energy moves by India’s largest private-sector corporation:

1)Reliance New Energy Solar Ltd, a wholly-owned subsidiary of Reliance Industries Ltd, announced the acquisition of 100% shareholding of Norway based REC Solar Holdings AS (REC Group) from China National Bluestar (Group) Co Ltd, for an Enterprise Value of USD 771 million ( Rs 5793 crore).

Rationale -This acquisition will provide Reliance with a ready platform to expand and grow in key green energy markets globally, including Europe, the US and Australia.

2) RNESL further announced to acquire a 40% stake in Sterling & Wilson Solar Ltd (SWSL) through a combination of primary investment, secondary purchase and an open of about Rs 2845 crore.

Rationale - SWSL, a leading and highly reputed international EPC and O&M service provider in the renewables sector will be a valuable addition to its solar value chain. The acquisition will help Reliance to make inroads into Middle East markets where SWSL has a strong presence.

3) RNESL and Denmark-based Stiesdal A/S have signed a cooperation agreement for technology development, and manufacturing of Stiesdal’s HydroGen Electrolyzers in India.

Rationale –Combine their strengths and capabilities and collaborate towards innovative electrolyzer technology capable of producing hydrogen at a significantly lower cost compared to current levels.

 “In partnership with Stiesdal, RIL would strive to achieve its stated goal of offering Hydrogen energy under USD 1 per kg in one decade,” Mukesh Ambani stated.

4) RNESL becomes a strategic lead investor in NexWafe GmbH for 25 million euros ( USD 28.8 million).

Rationale - NexWafe has a proprietary technology that can drastically reduce the cost of producing photovoltaic (PV) cells. Reliance will use NexWafe technology to build large-scale wafer factories in India.

Impact of Green Investment by Reliance:

These investments are the seeds sown by the company towards clean energy. The returns will take time, but it surely improves RIL’s ESG score, a key consideration to global fund houses, thereby impacting the company’s valuation by instilling investor confidence.

The shares of Reliance Industries are trading at Rs 2709.55 up by 1.56% at 1;33 pm today October 13.