Reliance invests $125 billion in capex over the past decade. These were Ambani’s top priorities

Reliance Industries Ltd has made substantial investments exceeding USD 125 billion over the past decade, primarily focusing on the expansion of its hydrocarbon and telecom sectors, according to a recent report. This investment spree, which included approximately USD 30 billion between FY13-18 to enhance the scale and competitiveness of its oil-to-chemical (O2C) business, and close to USD 60 billion between FY13-24E in 4G/5G capabilities for its telecom business, is now transitioning into a phase of less capital-intensive ventures.

With the completion of the pan-India 5G rollout and potential tariff hikes in the telecom sector anticipated, Reliance’s telecom business is poised to become a robust free-cash-flow (FCF) generator, complementing its existing cash cow O2C segment. Looking ahead, the conglomerate is shifting its focus towards relatively less capital-intensive ventures such as retail and upstream new energy, which offer higher returns and shorter gestation periods.

Compared to the longer gestation periods typical of hydrocarbon and telecom investments, retail and new energy ventures have shorter start-up timelines. While a refining or petrochemical facility usually takes at least five years to commence operations, an integrated poly-to-module solar facility can be operational within two years, and a retail store can be ramped up within 6-12 months.

Reliance has invested significantly in capex over the past decade, with the majority directed towards hydrocarbon and telecom sectors. However, the completion of the capex cycle for hydrocarbons and 4G telecom, coupled with the nearing end of the accelerated 5G telecom capex cycle, signals a transition towards lower capex intensity in the coming years.

The report anticipates a peak in capex intensity at USD 17.6 billion in FY23, followed by a sequential easing to USD 11.2 billion by FY26E. Moreover, new business ventures are expected to yield higher returns and achieve faster capex to EBITDA turns.

Reliance’s retail business has witnessed substantial expansion, with offline square footage doubling over FY21-24E and investments in omni-channel capabilities. The company’s foray into new energy is planned in two phases, with initial investments focused on upstream manufacturing for solar and battery production, followed by a larger deployment phase for solar downstream, electrolyzer, and wind capacities.