PORTFOLIO RELATED NEWS
Recently came across this article on Business Standard about the government approving transmission projects worth 2.4 lakh crore for connecting the 500GW of Renewable Energy Generating plants with the central grid of the country. Now this is indeed a huge step towards carbon neutrality but there lies an opportunity in such news. This plan proposes to lay down more than 30000km long transmission cables in the next 8 years to achieve the target. Now this only covers the transmission lines but more cables will be required for building the charging Infrastructure for EVs, Battery swapping station with continuous supply of electricity for charging and also building of battery storage solutions all across the country to ensure uninterrupted supply of green energy. Now how can we benefit from this?
Well a the project is worth 2.4 lakh crore. Now I don’t want to involve myself in the politics and how this project will be delayed and all. So I know for a fact that this will happen either today, tomorrow or in next 8 years, wires and cable companies like KEI, POLYCAB, FINOLEX, etc will have to undertake capacity expansion expenditure because their current capacities are in no way enough to meet such a demand. Also these companies do export a lot of wires and cables to middle east and other regions of the world. These wires and cables companies have proven themselves over the years and now it is their time to invest heavily in increasing their capacities and fulfilling the capital expenditure requirements. Now apart from Government expenditure, it is obvious that Private Companies will also have to invest in these transmission lines to reduce their dependence on traditional sources of energy.
Coming to the next part that are the power generation companies like TATA Power and Kalpataru Power who have been investing heavily only in Renewable Energy will have to incur this one time cost. Unlike traditional sources of Energy they do not require a lot of raw materials to generate electricity. With an installed capacity of 169GW of Renewable Energy, we are on track to achieve this years target of 175GW. As this share continues to grow, power companies will be able to generate more electricity at cheaper rates which will increase profit margins, which helps fund further growth in capacity additions. They can also sell the power on exchanges which will benefit stocks like IEX, in the long term.
My confidence in my Investments in KEI, POLYCAB, TATA POWER, IEX, etc continues to grow with such positive tail winds.
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