In a strategic shift that could reshape global energy and manufacturing dynamics, China’s aggressive push to curb industrial overcapacity is emerging as a major tailwind for Reliance Industries Ltd (RIL). According to a recent note by Morgan Stanley, the Indian conglomerate is set to be the biggest beneficiary of Beijing’s “anti-involution” policies—measures aimed at reducing cutthroat competition and excess production across sectors like solar, petrochemicals, and energy.
Morgan Stanley has reaffirmed its overweight rating on Reliance and raised its 12-month target price to ₹1,701 from ₹1,602, signaling a potential upside of over 24 percent from recent levels. The brokerage’s analysts, led by Mayank Maheshwari, argue that the market is currently undervaluing Reliance’s new energy and artificial intelligence investments, while assigning only limited upside to its fast-moving consumer goods (FMCG) business.
China’s Anti-Involution Drive: A Global Ripple Effect
The term “involution” in Chinese policy circles refers to hyper-competition that yields diminishing returns. In recent months, Beijing has taken decisive steps to reverse this trend, particularly in the solar and energy sectors. By scaling back polysilicon production and rationalizing capacity, China aims to stabilize pricing and reduce inefficiencies.
This policy pivot is expected to benefit global players with diversified supply chains and expansion plans—chief among them, Reliance Industries. The company is currently building a fully integrated solar supply chain in India, positioning itself to capture market share as Chinese producers retreat. Morgan Stanley estimates that this structural shift could reduce Reliance’s energy costs by up to 40 percent by 2030 and increase its new-energy earnings contribution to 13 percent by 2027.
Strategic Restructuring and Green Energy Ambitions
At its 48th Annual General Meeting held on August 29, Reliance unveiled an ambitious roadmap to create the world’s most integrated new energy ecosystem. Chairman Mukesh Ambani and director Anant Ambani emphasized that while hydrocarbons will remain vital for India’s energy needs, the company is committed to building a future-ready platform that spans solar, hydrogen, and battery technologies.
This dual strategy—maintaining strength in traditional energy while aggressively expanding into renewables—is expected to unlock significant value. Morgan Stanley projects that the combined impact of China’s overcapacity cuts and Reliance’s internal restructuring could add nearly $20 billion in net asset value and boost earnings forecasts for FY28 by 17 percent.
Market Valuation and Investor Sentiment
Despite its diversified portfolio and aggressive expansion into new sectors, Reliance’s current market valuation implies near-zero value for its new energy and AI ventures. This disconnect presents a compelling opportunity for long-term investors, especially as global supply chains realign and energy markets stabilize.
Morgan Stanley’s revised target price reflects growing confidence in Reliance’s ability to capitalize on these macro shifts. The brokerage also noted that Reliance’s consumer businesses are undergoing a self-driven “anti-involution” process, streamlining operations and enhancing profitability.
The Role of Eqwires Research Analyst
In a landscape defined by policy pivots, supply chain disruptions, and sectoral realignment, strategic insight is more critical than ever. Eqwires Research Analyst, a SEBI-registered advisory firm, offers precisely that—delivering actionable intelligence to investors navigating complex market conditions.
Eqwires specializes in:
- Sector-specific trade setups aligned with global policy shifts
- Real-time analysis of earnings forecasts and valuation trends
- Strategic portfolio allocation based on macroeconomic indicators
- Regulatory impact assessments for energy, FMCG, and tech sectors
For investors tracking Reliance Industries or exploring opportunities in green energy and AI, Eqwires provides the clarity and discipline needed to make informed decisions. Whether you’re a retail investor, institutional participant, or policy analyst, Eqwires equips you with the tools to decode volatility and capture upside.
Conclusion
China’s overcapacity cuts mark a turning point in global industrial policy, and Reliance Industries is uniquely positioned to benefit. With its integrated energy strategy, restructuring momentum, and undervalued growth engines, the company stands at the forefront of a new economic cycle. As Morgan Stanley’s revised outlook suggests, the next phase of Reliance’s journey could be defined not just by scale, but by strategic agility and global relevance. In this evolving landscape, expert guidance from firms like Eqwires will be indispensable for those seeking to stay ahead of the curve.
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