In a world where our population is booming and our reliance on technology is ever-growing, the demand for electricity has never been greater.
From keeping our mobile phones charged to powering our homes and businesses, electricity is the lifeblood of modern society.
As energy demand continues to rise, the challenge of cutting carbon dioxide emissions has become more urgent. In recent years, India has made steady progress in shifting from coal-based power to cleaner renewable sources.
Although coal still plays a major role in the country’s energy mix, efforts to expand renewable capacity are clearly underway, reflecting a determined push to reduce dependence on fossil fuels and tackle climate change.
India has set an ambitious goal of installing 500 GW of non-fossil fuel capacity by 2030, achieving net-zero emissions by 2070, and meeting 50% of its electricity needs from renewable energy sources by 2030.
Nuclear power is a clean and environmentally friendly source of base-load electricity generation. Steps have been initiated to increase nuclear power capacity to fulfil the goal of achieving a 50% energy mix from non-fossil fuels.
In this article, we will look at the companies that are present in the nuclear energy space in India.
Read on…
#1 Tata Power
Tata Power Company Ltd is primarily involved in the business of the generation, transmission, and distribution of electricity.
The company aims to produce electricity completely through renewable sources. It also manufactures solar roofs and plans to build 1 lakh EV charging stations by 2025.
The company has 14,381 MW energy capacity which includes 8,860 MW thermal, 1,007 MW wind, 880 MW hydro, 443MW waste heat recovery /BFG, 3191 MW solar and 3,760 MW renewable capacity under construction.
The company plans to invest more than Rs 200 bn in new capex projects in FY25 said its chairman N. Chandrasekaran in the company’ annual general meeting.
A large part of this will be towards accelerating the company’s renewable energy portfolio and balance towards transmission and distribution businesses.
Tata Power is exploring entry into the Small Modular Reactor (SMR) sector. The company is interested in future SMR implementation and is waiting for policy reforms to allow private involvement in India’s nuclear sector.
Going forward, management guides for improved financial performance with a focus on renewable energy projects despite industry challenges.
The stock is down 11% in the last one year due to muted operational and financial performance.
Tata Power Share Price – 1 Year
#2 Power Mech Projects
Power Mech Projects Ltd, incorporated in 1999, is an engineering and construction company providing integrated services in erection, testing, and commissioning (ETC) of boilers, turbines and generators.
The company undertakes ultra mega power projects, super critical thermal power projects, and sub critical power projects.
Power Mech stands to gain from the increasing capital expenditure budget to build India’s energy security as the company builds turbines and generators for power projects.
The company derives 89% of its revenues from India and balance 11% from exports.
Power Mech has of a distinguished clientele – Adani power, BHEL, Larsen & Toubro, Tata Power, NTPC – in the domestic market and Mitsubishi, Siemens, and Hyundai in the international market.
As of FY25 end, the company had an orderbook of Rs 540 bn including two contracts worth Rs 400 bn executable over the next 25 years.
In October 2023, the company raised Rs 3.5 bn via issue of about 900,000 shares on a QIP basis.
Power Mech Project’s involvement with nuclear energy equipment started with a recent contract to construct civil infrastructure for turbine island packages at the Kaiga Atomic Power Project.
They will perform civil, structural, and architectural work, including the turbine generator building and equipment foundations, not the manufacturing or installation of nuclear equipment itself.
Going ahead, management has guided for strong revenue growth in excess of 30% for the next two years on the back of strong orderbook. The management also guided for improving EBITDA margins going ahead.
Power Mech stock is down 10% in the last one year on the back of muted financial performance.
Power Mech Projects Share Price – 1 Year
#3 Bharat Heavy Electricals Ltd
Bharat Heavy Electricals Ltd (BHEL) is an integrated power plant equipment manufacturer engaged in design, engineering, manufacture, erection, testing, commissioning, and servicing of a wide range of products and services for the core sectors of the economy.
It’s the flagship engineering and manufacturing company of India owned and controlled by the Government of India.
BHEL derives 76% of its revenues from the power sector and the balance 24% from the industrial sector. The company has capabilities to manufacture the entire range of power plant equipment including thermal, gas, hydro, and nuclear power projects.
BHEL has executed about 1,000 coal, hydro, gas, and nuclear based utility sets since its inception in 1964. It accounts for around 53% of India’s total capacity of utility power projects.
During a recent visit of Prime Minister Modi to Russia, it was announced that India and Russia are discussing the construction of 6 more high-power nuclear power plants. These power plants are reportedly going to be built by BHEL and Power Mech Projects in collaboration.
BHEL manufactures and supplies critical equipment for India’s nuclear power plants, including steam turbines, generators, heat exchangers, and reactor components like headers and end shields.
The company specialises in the Turbine Island, which includes the turbine, generator, condenser, and associated equipment, and is also involved in the primary side of the Nuclear Steam Supply System (NSSS).
Shares of BHEL are down 12% over the past one year on the back of muted operational performance.
Bharat Heavy Electricals Share Price – 1 Year
#4 Walchandnagar Industries
Walchandnagar Industries Ltd is a heavy engineering and project execution company. It has diversified business offerings across core sectors with focus on EPC / turnkey projects, hi-tech manufacturing, engineering products and engineering services.
The company undertakes projects and supplies machinery and equipment in the field of nuclear power, aerospace, missile, defence, oil and gas, steam generation plants, independent power projects, and sugar plants.
For over four decades, Walchandnagar Industries has partnered with key entities including the Department of Atomic Energy (DAE), Nuclear Power Corporation of India Limited (NPCIL), and Bhabha Atomic Research Centre (BARC).
The company is a supplier of Class I nuclear components to NPCIL, BARC, and BHAVINI, and has supplied critical equipment such as dump tanks, fuel magazines, calandrias, end shields, moderator heat exchangers, and steam generators for nuclear power plants.
It manufactures critical core equipment for Indian nuclear power plants, including calandrias, end shields, heat exchangers, and dump tanks, for both Pressurized Heavy Water Reactors (PHWR) and Fast Breeder Reactors (FBR).
The company has played a pivotal role in supplying critical equipment for various nuclear projects in India, including reactors ranging from 220 MWe to 700 MWe PHWRs and the Fast Breeder Reactor (PFBR) at Kalpakkam.
Shares of Walchandnagar Industries are down 30% in the last year. However, the stock is up 22.3% in the past one month.
Walchandnagar Industries Share Price – 1 Year
Conclusion
Nuclear power is one of the cleanest sources of energy in the world. Despite this, it only accounts for 3% of India’s electricity generation.
This ensures a high scope of growth for the companies directly and indirectly involved in this sector. The Russia-India nuclear deal stands as a landmark agreement for India’s energy sector.
Further, India aims to significantly increase the share of nuclear energy in its electricity mix by the year 2047, coinciding with the nation’s 100th year of independence.
As a medium-term target, India targets tripling its current nuclear power generation capacity by 2030, which stands at about 7.5 GW.
Investors can make use of the ongoing volatility and build a solid portfolio of fundamentally strong companies at lower prices.
Remember the challenges before investing. Nuclear power companies are capex heavy and any downturn in the economic cycle can impact their profitability significantly.
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