Ambani's Reliance a big gainer from China's push to curb price wars, Morgan Stanley says

Reliance Industries is set to emerge as the biggest beneficiary of China’s attempts to rein in overcapacity across industries, alongside its own internal restructuring, according to Morgan Stanley.

Billionaire Mukesh Ambani’s Reliance “is the largest beneficiary of China’s anti-involution focus across energy and solar supply chains,” analysts led by 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.”

In China, the term ‘involution’ refers to cutthroat competition that yields little return, while ‘anti-involution’ captures moves by policymakers and firms to counter that. The change has lifted equities at a time when Beijing is fighting deflation.

Reliance is creating a fully integrated solar supply chain in India just as overcapacity pressures force China to rationalise its polysilicon output. Morgan Stanley said that shift could reduce Reliance’s energy costs by as much as 40% by 2030, and push new-energy earnings contributions to 13% by 2027.

At its annual general meeting on 29 August, Reliance set out an expansive green energy roadmap. Chairman Mukesh Ambani and director Anant Ambani unveiled plans to construct what they described as the world’s most integrated new energy ecosystem. “Hydrocarbons will remain vital for India for several years. Our strategy is clear: excel in traditional energy while building the system of the future,” Mukesh Ambani told shareholders during the company’s virtual 48th AGM. The approach reflects Reliance’s intent to maintain strength in its Oil-to-Chemicals (O2C) operations while stepping up renewable investments.

Ambani also repeated a commitment to double Reliance’s earnings before interest, taxes, depreciation, and amortisation, a goal first announced in 2022.

Also Read: Reliance bets big on green energy with mega solar, hydrogen moves

Morgan Stanley’s analysts said: “China’s anti-involution marks the bottom of the petrochemical cycle” and argued that Beijing’s measures to address overcapacity in the solar sector will support pricing for Reliance’s solar supply chain. They estimated that anti-involution efforts in both China and Reliance could add $20 billion in net asset value and increase the company’s earnings forecast for fiscal 2028 by 17%.

The brokerage has kept its overweight rating on Reliance, while raising its 12-month price target to ₹1,701 from ₹1,602. That figure points to a potential 26% upside from Monday’s closing level. Analysts added that current valuations “imply near zero value to new energy and AI investments with limited upside on FMCG growth.”

Brokerages also see sustained long-term gains ahead for Reliance shares. Nuvama has given the highest target price, at ₹1,733. It said there is a “multi-decadal opportunity” in the company’s new energy business, with O2C expansion moving forward, and artificial intelligence and FMCG offering further growth levers.