Reliance Industries to Benefit from China's Anti-Involution Drive: Morgan Stanley

Reliance Industries is set to benefit from China's efforts to curb overcapacity in various industries, including energy and solar. The company's efforts to streamline its consumer businesses and build an integrated solar supply chain in India could cut energy costs by up to 40% by 2030 and lift new-energy earnings to 13% by 2027. Morgan Stanley estimates that anti-involution efforts will add $20 billion in net asset value and 17% to earnings estimate for FY2028.

Reliance Industries Ltd. stands to gain significantly from China's push to curb overcapacity in various industries, according to a recent report by Morgan Stanley [1]. The conglomerate's efforts to streamline its consumer businesses and build an integrated solar supply chain in India could cut energy costs by up to 40% by 2030 and lift new-energy earnings to 13% by 2027, as per the analysts.

China's anti-involution policies, aimed at reducing cutthroat competition with little payoff, have supported equities and are expected to aid Reliance's solar supply chain. Morgan Stanley estimates that these efforts will add $20 billion in net asset value and 17% to earnings estimates for fiscal year 2028. The analysts maintained an overweight rating on the stock and raised its 12-month price target to 1,701 rupees from 1,602 rupees, implying a 26% gain from Monday's close.

Reliance is building out a fully integrated solar supply chain in India at a time when overcapacity is forcing China to rationalize its polysilicon production. This could significantly reduce Reliance's energy costs and boost its new-energy earnings contributions. The company's strategic partnerships with Google and Meta to build India's AI infrastructure further position Reliance as a key player in the country's technological advancement and economic growth [2].

The brokerage CLSA also retained its Outperform rating on Reliance, with Jio IPO, AI, and FMCG expansion as key catalysts [3]. Any announcements on the Jio IPO at the upcoming AGM will be a significant catalyst, along with clarity on AI plans and FMCG expansion details.

References:
[1] https://www.bloomberg.com/news/articles/2025-09-02/reliance-to-gain-as-china-curbs-price-wars-morgan-stanley-says
[2] https://theoutpost.ai/news-story/reliance-industries-partners-with-google-and-meta-to-spearhead-india-s-ai-revolution-19703/
[3] https://www.financialexpress.com/market/clsa-raises-target-price-for-reliance-industries-jio-ipo-and-3-big-catalysts-to-watch-3960962/