RIL capex set to peak on giga factories, FMCG, AI push

Reliance Industries Ltd (RIL) is back in a phase of accelerated capital expenditure, with investments expected to peak over the next two quarters of FY26 as the conglomerate channels vast capital into its next wave of structural growth drivers—renewables, FMCG, and Artificial Intelligence (AI). The capital-heavy investment cycle is focused on constructing its five solar and battery Giga factories, deploying AI across telecom and retail platforms, and aggressively expanding its retail and fast-moving consumer goods (FMCG) businesses.

This investment surge is reflected in consolidated capex rising sharply to ₹40,000 crore in Q2, up from ₹29,875 crore in Q1 FY26. It is firmly underpinned by a strong balance sheet, robust operating cash flows, and substantial cash and cash equivalents—allowing RIL to fund its transformative projects without financial strain.

RIL’s net debt stood at ₹1,18,600 crore as of September 30, 2025, translating into a conservative leverage ratio, comfortably serviced by the group’s steady operational profits. The company’s gross debt was ₹3,48,230 crore, offset by high cash and cash equivalents of ₹2,29,685 crore, resulting in a healthy net debt position.

The conglomerate’s financial discipline continues to support its intensifying capital deployment. In the first half of FY26, RIL posted an Ebitda of ₹1,08,391 crore and a net profit of ₹52,827 crore, compared with ₹36,549 crore in the same period of the previous fiscal. These numbers fuel Mukesh Ambani’s ambition to cross ₹1 lakh crore in net profit in FY26, particularly ahead of the planned Jio listing by mid-next year.

This financial cushion provides RIL with the necessary firepower to manage the projected capex peak over the coming quarters. Highlighting the underlying operational strength driving this expansion, Ambani said in a press note: “Consolidated Ebitda registered 14.6% growth on a year-on-year basis, reflecting agile business operations, a domestic-focused portfolio, and structural growth in the Indian economy.” Brokerage Macquarie says in its note, “At a segment level, retail was strong, Jio steady, and O2C much improved.”

The most capital-intensive component of the current capex cycle is the Dhirubhai Ambani Green Energy Giga Complex (DAGEC) in Jamnagar— at the heart of RIL’s net-zero carbon strategy. The company had earlier earmarked ₹75,000 crore for this project, but sources indicate the outlay may exceed initial estimates.

The complex will house five Giga factories aimed at dominating the entire clean energy value chain. These include an integrated solar photovoltaic (PV) value chain—comprising polysilicon, ingot, wafer, glass, solar cells, and modules—and a battery value chain that covers both cell and pack manufacturing. RIL has already commissioned four PV module lines, with the first cell line expected to go live soon. Work on the battery energy storage Giga factory is progressing rapidly, with significant on-site progress for 40 GWh (gigawatt-hour) manufacturing capacity and production line equipment installation already underway.

Project development across the 550,000-acre solar farm site in Kutch is advancing steadily, with engineering, feasibility studies, and land development in progress. RIL expects to begin commissioning solar generation during the first half of next year, primarily for captive use and green fuel production. However, Morgan Stanley Research notes some delays in commissioning new energy projects.

RIL is building an end-to-end energy ecosystem encompassing round-the-clock power supply and green chemicals. The entire ecosystem is expected to be fully operational within the next four to five quarters. According to Bank of America Securities, this business is also likely to attract investments from strategic partners committed to long-term offtake agreements. JM Financial notes that RIL’s consolidated capex also increased in Q2 due to expansions in the oil-to-chemicals, digital, and retail businesses.

The company began rolling out solar photovoltaic (PV) modules seven months ago from its new facility in Jamnagar, Gujarat. The first phase of its integrated solar manufacturing plant is on track for completion in the coming quarters, targeting 10 GW of renewable energy output for internal use.

Within the Jamnagar complex, RIL is also developing facilities for green hydrogen and power electronics, supported by AI- and robotics-enabled systems. This solar initiative forms part of RIL’s broader renewable strategy that includes energy storage and green hydrogen. The company is also constructing a 30 GWh battery plant in Jamnagar.

Another key investment area is AI. RIL is developing an AI ecosystem under the newly formed Reliance Intelligence, which will create AI products and services for consumers, enterprises, and small and medium-sized businesses. The services will be designed for scale and affordability, leveraging RIL’s massive user base—Jio alone had 506 million subscribers as of September 30, 2025. Another focus area for RIL’s AI strategy will be Reliance Retail’s 19,821 stores across India.

Beyond AI, the company's FMCG and financial services arms will also require capital to expand their markets. The FMCG portfolio is expected to grow through new product launches and acquisitions.

Following the Q1 results, Mukesh Ambani said RIL would continue its stellar track record of doubling every four to five years. He expects the new energy business to become as profitable as its mainstay oil-to-chemicals segment over the next five to seven years. As he noted in the 2024 Annual General Meeting, “I foresee it becoming as big and profitable over the next five to seven years as our O2C business.”