Additionally, the brokerage firm also informed that it has removed Interglobe Aviation (IndiGo) and Jubilant Foodworks from its focus list.
The investment bank said the move reflects its preference for large private sector names in Financials, Consumer, and Industrial segments.
“Overall, we recommend large private sector Financials, Consumer and Industrial stocks,” the firm stated in its latest update.
Here is a detailed view of Morgan Stanley on the changes it has made:
Reliance Industries: AI, green energy in spotlight
Morgan Stanley has highlighted Reliance Industries’ ongoing push into artificial intelligence and clean energy as central to its inclusion. The firm projects a significant value unlock, stating that RIL “is poised to unlock $50bn in value through its strategic push into New Energy and AI.”A key component of this strategy involves a multi-gigawatt Gen AI datacentre using NVIDIA Blackwell chips, developed in partnership with Google and Meta, backed by a $15 billion investment target by 2027. Despite the scale, the brokerage believes the valuation potential remains underappreciated.“RIL’s AI potential remains undervalued,” Morgan Stanley noted.
On the energy side, the brokerage pointed out that “with China exiting a third of global polysilicon capacity, RIL is set to become South Asia’s only fully integrated 20GW solar chain by 2027, positioning it as a key non-China beneficiary in the global clean tech reset.”
The note also addresses RIL’s O2C (Oil-to-Chemicals) business, stating that “China involution is further tightening refining margins, while retail and telecom continue to outperform, driven by FMCG, and fixed wireless users improving quality of returns.”
The firm’s energy analyst, Mayank Maheshwari, has valued RIL’s New Energy + AI vertical at $25 billion, up from an earlier estimate of $19 billion. The brokerage also sees an “11% EPS CAGR through FY28e, and sees scope for multiple expansion across verticals.”
Varun Beverages: Steady track record
Morgan Stanley has also added Varun Beverages Ltd (VBL), citing its ability to scale both domestic and global operations, along with a favourable shift in sentiment from prior concerns.
“VBL has a solid track record of scaling domestic and international opportunities,” the report states.
Consumer analyst Sheela Rathi of Morgan Stanley notes that “the worst of growth weakness (led by seasonality) has passed.” The report further mentions recent messaging from the company, indicating no further new market expansions and highlighting its entry into the alcobev segment as key to future growth.
Morgan Stanley views this as “strengthening the case for stock re-rating.”
Exit from Interglobe Aviation and Jubilant Foodworks
To accommodate these additions, Morgan Stanley has removed Interglobe Aviation and Jubilant Foodworks from its focus list. No additional commentary was provided in the note regarding the rationale behind these removals.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
