Go Green! 3 power stock ideas for your long-term portfolio

The ‘grey to green’ theme is gaining pace in India as the renewable energy sector is set to increase four times by 2030. As India aims to meet 50 per cent of its energy requirement from renewable energy by 2030 and reduce its carbon emission by 45 per cent, domestic brokerage firm Securities finds money-making opportunities in three power stocks for long-term investors.



As a part of its transition to become an integrated power company, state-run power generator NTPC is striving to increase the pie of its capacity mix more in favour of renewables, from 3 per cent currently (1.9GW) to 46 per cent in FY32 (60.0GW). NTPC is making huge strides in transforming itself into a company with cleaner coal assets, higher share of renewables, and greater focus on ESG parameters.

“It plans to install ~2.5GW of incremental RES capacity by FY24, followed by another ~55GW by FY32. Over FY22-24E, we expect 6.6% CAGR in PAT while generating INR346bn in FCF. Management plans to monetise its trading arm and renewable business, which will enhance the value proposition for stakeholders,” HDFC Securities said.

The brokerage likes NTPC because of its risk averse regulatory business model, greater focus on clean energy and commercialisation of 4.7 GW in FY23E and 6.0 GW in FY24E.

Renewables Ltd (BRL) is the largest non-Chinese solar glass producer globally, with around 35 per cent market share in India. “As India is planning to enhance its solar capacity 6x-7x over FY22-FY30, BRL is well-placed to leverage the robust growth opportunity. Also, as the robust demand would scale up the domestic cell and module manufacturing capacity, BRL plans to expand its capacity by 6x to 2600 TPD over FY22-FY25 to support ~15GW of solar module manufacturing requirements. The company plans to incur a Capex of INR22bn for it,” HDFC Securities said.

The key risks to the investment hypothesis includes – dumping by Chinese players, failure in executing module expansion plan and non-extension of anti-dumping duty after August.




Tata Power’s transition into the green segment is gaining strong momentum, with nearly 40/10 per cent market share enjoyed by its EV charging/solar EPC segments. The company has reported strong 50 per cent YoY revenue growth across its EPC division in recent quarters and has consistently maintained a healthy order book of Rs 120-130 billion by winning fresh orders alongside strong executions. The company also plans to incur Rs 34 billion in capex to enhance its cell and module manufacturing capacities by 4GW each.

HDFC Securities said Tata power will gain from its early mover advantage into the EV charging space. “With 15 per cent market share, we believe there is a potential business opportunity of $650-750 mn for Tata Power,” it said.

However, the brokerage believes that the stock is fairly valued at the current price.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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