Morgan Stanley Optimistic About RIL's Fourth Monetisation Cycle

Morgan Stanley re-rated Reliance Industries, highlighting the company's 'fourth monetisation cycle' which signals a major cash flow turn in all sectors. Notably, for the first time, energy, telecom, and consumer units are set to be cash-flow positive simultaneously, driven by strategic investments and business strengths.

Global brokerage firm Morgan Stanley has upgraded its outlook on Reliance Industries Ltd (RIL), attributing this reassessment to the commencement of what it terms the company's 'fourth monetisation cycle'. This phase is marked by a pivotal shift in cash flows across RIL's major business branches: energy, consumer, and telecommunications.

Morgan Stanley's report, 'Monetisation 4.0', notes that since the onset of the COVID-19 pandemic, RIL has made investments exceeding US$80 billion. These investments are projected to start yielding results by 2026. Crucially, the report highlights that for the first time, RIL's major sectors are poised to be free-cash-flow positive concurrently, a development set to re-rate the company's valuation significantly.

The brokerage draws attention to RIL's refining segment, currently described as experiencing a 'golden age', with margins nearing US$14 per barrel. Alongside, telecom giant Jio is showing promise with cash generation prospects as its capital intensity decreases. A rise in ARPU, driven by technological advancements and strategic upgrades, further bolsters the optimistic forecast.