Reliance Industries enters into PPA with Adani Power subsidiary

Reliance Industries Limited (RIL) has entered into a significant power purchase agreement (PPA) with Mahan Energen (MEL), a subsidiary of the Adani Power. This 20-year deal, valued at Rs 50 crore, marks a strategic collaboration between two of India’s industrial giants. The crux of the agreement lies in APML supplying electricity to RIL for a period of 20 years. The deal likely involves bulk power supply to cater to RIL’s vast energy requirements across its refineries, petrochemical plants, and other operations. The agreement signifies a Rs 50 crore investment from RIL, likely towards securing a stable and reliable power source for the next two decades. This strategic move can potentially lead to cost savings for RIL in the long run, especially considering the rising costs of conventional power generation.

Company Overview

Reliance Industries Limited (RIL), has a diversified presence across sectors like petrochemicals, refining, retail, telecom, and now increasingly, renewable energy.

Market Capitalization of RIL is ₹ 2,010,621 Cr. TTM EPS is 103.41. TTM PE is 28.74. P/B is 2.45. ROE is 8.94 % and ROCE is 9.14 %. Share Price of the company opened at ₹2,985.75 and closed at ₹2971.70. For Q3 of FY24: Revenue of the company is ₹2,48,160 cr. Net profit is ₹19,641 cr. EBITDA is ₹44,678 cr. Capital Expenditure is ₹ 30,102 Cr. Cash & Cash Equivalents is ₹ 192,371 Cr.

Adani Power is an Indian multinational power and energy company situated in Khodiyar, Ahmedabad, India. It is a subsidiary of the Adani Group. It is a privately owned thermal power producer with a 12,450 MW capacity. It also runs a 40 MW mega solar facility in Naliya, Bitta, Kutch, Gujarat.

Market Capitalization of Adani Power is ₹205,883 Cr. TTM EPS is 60.50. TTM PE is 8.82. P/B is 12.55. ROE is 44.8 %. ROCE is 15.8 %. Share price of Adani Power opened at ₹520.00 and closed at ₹533.80 For Q3 of FY24: Revenue is ₹12,991.44 Cr. EBITDA is ₹5,059 cr. Profit After Tax is ₹2,737.96 Cr. EPS is 6.61. Total assets are ₹88,289.84 Cr.

The RIL-APML deal holds immense significance for India’s power sector. It highlights a growing trend of collaboration between private players to ensure efficient and reliable power supply. The deal could potentially pave the way for further consolidation within the power sector, with other companies exploring similar arrangements. The agreement might indirectly propel both companies to prioritize renewable energy sources in their future endeavors, considering India’s ambitious clean energy targets.

RIL might secure a competitive electricity tariff compared to prevailing market rates through this long-term agreement. This could lead to significant cost savings over the 20-year period, particularly if energy prices rise in the future. RIL, with its vast energy requirements across its various ventures, might be seeking to diversify its power procurement sources. This agreement could be a strategic move to hedge against potential price fluctuations or secure a reliable backup option. APML, a prominent player in the Indian power sector, assures a reliable source of electricity for RIL’s operations. This can minimize disruptions and ensure smooth functioning of RIL’s facilities.

The Reliance-Adani Power PPA presents a captivating development in the Indian energy sector. The long-term benefits in terms of cost optimization and reliability are remarkable. deal signifies a strategic alliance with long-term implications for both companies. This collaboration, coupled with the focus on renewable energy, paves the way for a more sustainable and secure energy future for India.

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