Reliance may soon disrupt India's solar energy market

Reliance’s foray in green energy, particularly in solar panel manufacturing, has a wider ramification on the entire supply chain, says Harshvardhan Dole, Vice President, IIFL. Edited excerpts from an interview on RIL AGM:

There were a lot of big announcements at the RIL AGM. Let us talk about the key takeaways and the new energy foray.
The diversification of RIL into green energy is a great step. It will de-risk their revenue model. It will cut down their reliance on traditional O2C business and make them more tech-savvy and a green energy friendly company. This will improve their overall score in ESG framework from a macro perspective.

Secondly, RIL’s foray in green energy, particularly in the solar panel manufacturing, has a wider ramification on the entire supply chain. India has been importing panel-related equipment and assembling them here to convert them into a solar module. That has led to questions on sustainability of revenue models of several companies. Now with RIL making an integrated value proposition, it changes the profit pool and the industry structure. To that extent, it is quite a disruptive move.

What about the ultra affordable JioPhone Next? This is going to be the next fillip for Jio.
It seems quite promising. However, one should bear in mind what is happening globally. There is a chip shortage all over the place and so the supply chain is quite stretched. We would wait for details in terms of pricing and how they bundle the plan. At the end of the day, they have to garner a substantial market share to benefit on the Jio side.

While the energy business got a lot of attention this time, what are your takeaways from all the key business segments in Reliance Retail?
After the near-term turbulence that the retail business is encountering because of the second wave, I hope there is no third wave. I think the revenue guidance or trajectory guided by the chairman yesterday is implying a CAGR of anywhere between 35-45% over the next three to five years. That is definitely above the valuation that we were penning in for Reliance Retail. We are positively surprised. One would have to break it down into what is coming from JioMart where the scale up can be much faster than the traditional offline business model.