Analysts up RIL’s target price by over 20% on the belief that it is best positioned to capitalise on the country’s hydrogen adoption plans

• Two foreign investment banking firms expect the share price of Reliance to increase because of the company’s plan towards generating hydrogen energy.
• Morgan Stanley believes that the hydrogen segment will be 10% of Reliance Industries’ earnings by 2030.
• Moreover, analysts expect the hydrogen market to be even bigger than electric.

Shares of India’s largest company by market cap, Reliance Industries, has gained almost 8% in the last five days at a time when markets have been reeling under pain over high inflation.

The rise in the stock is because of analysts and investors' new belief over the company’s hydrogen energy segment.

Global investment banking firm Morgan Stanley expects the hydrogen segment of RIL to contribute 10% to its earnings with a net asset value of $10 billion.

Analysts believe hydrogen adoption plans are quickly progressing in the country in line with global peers, which makes RIL best positioned to capitalise on this segment. “Hydrogen adoption plans are quickly progressing, with RIL best positioned to capitalise,” said Morgan Stanley in a report dated April 20.
On April 21, shares of RIL ended up 2.34% at ₹2,783 per share.

How is hydrogen used as fuel?

Hydrogen is a clean energy alternative and can be made directly from fossil fuels or biomass, or it can be produced by passing electricity through water.

This also means that the energy created from hydrogen does not release toxic carbon dioxide, which makes it one of many potential energy sources that could help reduce carbon emissions and slow global warming.

Another reason why RIL will benefit from the production of hydrogen is because it will help Prime Minister Narendra Modi’s ambitious target of becoming net zero in carbon emissions by 2070.

Reliance Industries has announced to produce green hydrogen and also make an electrolyser factory to manufacture green energy.

“As the green hydrogen ecosystem is rolled out, it will also raise demand for RIL's solar panels. To put things in perspective, India's 2030 hydrogen production target would absorb the entire 100 gigawatts cumulative panel capacity that RIL plans to achieve,” said a report by Morgan Stanley.

Green hydrogen is hydrogen that is produced using renewable energy through electrolysis.

Besides, RIL will also benefit from the government of India’s Green Hydrogen Policy. The government believes hydrogen can play a huge role in shifting to clean energy and it focuses on increasing dependency on cleaner forms of energy and abandoning fossil fuels.

The government policy is aimed at boosting green hydrogen production in the country, which can also reduce India’s dependence on importing over 80% of the oil and gas requirements.

The policy allows companies to easily set up the capacity to generate electricity from renewable sources such as solar or wind anywhere in the country which is beneficial for players like RIL.

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