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

According to a recent report, Reliance Industries Limited has made significant investments exceeding USD 125 billion over the past decade, primarily focusing on the expansion of the hydrocarbon and telecom sectors. This wave of investments, included approximately USD 30 billion between FY13-18 to enhance the scale and competitiveness of its oil-to-chemicals (O2C) business, and nearly USD 60 billion between FY13-24E in 4G/5G capabilities for its telecom business. The business is now moving into the less capital-intensive venture stage.

With the completion of the 5G rollout across India and potential tariff increases in the telecom sector, Reliance's telecom business is poised to become a strong free cash flow (FCF) generator, complementing its existing O2C segment, a source of income. Looking ahead, the group is shifting its focus towards relatively less capital-intensive projects, such as retail and new energy, which offer higher returns and shorter production runs.

Compared to the longer turnaround periods that characterize hydrocarbon and telecommunications investments, retail and new energy projects have shorter start-up timelines. While a refining or petrochemical facility typically takes at least five years to begin operations, a multi-module integrated solar facility can be operational in two years and a retail store can be up and running within 6 to 12 months.

Reliance has invested heavily in capex over the past decade, with most of it going into the oil, gas and telecom sectors. However, the completion of the HCEX and 4G telecom capex cycle, along with the proximity of the end of the accelerated 5G telecom capex cycle, indicates a shift 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. Additionally, new business ventures are expected to generate yield returns and achieve faster capex to EBITDA turns.

Reliance's retail business saw significant expansion, with offline footprint doubling during FY21-24E and investments in omnichannel capabilities. The company's entry into the new energy space is planned in two phases, with initial investments focused on initial manufacturing of solar and battery production, followed by a broader deployment phase of solar, electrolyzer, and wind capabilities.

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