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As a part of its transition to become an integrated power company, state-run power producer NTPC is striving to increase the pie of its capacity mix in favor of renewable energy, from 3 per cent (1.9 GW) at present. Up to 46 per cent in FY32 (60.0GW). NTPC is making great strides towards transforming itself into a company with clean coal assets, higher share of renewable energy and more focus on ESG norms.
“It is planning to install an incremental RES capacity of ~2.5GW by FY24, followed by another ~55GW by FY32. In FY22-24E, we are expecting 6.6% CAGR in PAT while generating INR346bn in FCF. expect. Management plans to monetize its business arm and renewable energy business, which will enhance the value proposition for stakeholders,” HDFC Securities said.
The brokerage prefers NTPC due to its risk-averse regulatory business model, high focus on clean energy and commercialization of 4.7 GW in FY23E and 6.0 GW in FY24E.
With around 35 percent market share in India, Renewables Limited (BRL) is the largest non-Chinese solar glass producer globally. “As India plans to increase its solar capacity by 6x-7x in FY22-FY30, BRL is well positioned to take advantage of the strong growth opportunity. Also, since the strong demand for domestic cell and module manufacturing Will increase the capacity, BRL plans to expand its capacity by 6x to 2600 TPD in FY22-FY25 to support ~15GW solar module manufacturing requirements, HDFC Securities said.The company plans to levy a capex of INR22bn for this .
Key risks to the investment hypothesis include dumping by Chinese players, failure to implement the module expansion plan and non-extension of anti-dumping duty after August.
Tata Power’s transition to the green segment is gaining momentum in its EV charging/solar EPC segment with a market share of around 40/10 per cent. The company has registered strong revenue growth of 50 per cent YoY in its EPC division in the recent quarters and has consistently maintained a healthy order book of Rs 120-130 billion by winning new orders along with strong execution. The company is also planning to spend Rs 34 billion in capex to increase its cell and module manufacturing capacity to 4GW.
HDFC Securities said Tata Power will benefit from its early mover advantage in the EV charging space. “With a market share of 15 per cent, we believe there is a potential business opportunity of $650-750 million for Tata Power,” the company said.
However, the brokerage believes that the stock is highly valued at the current price.
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)
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