My views as follows :
(1) Renewable Energy in terms of Solar Wind Hydro , CBG , Green hydrogen are here to stay… It is an irreversible process world over due to targetted reduction in carbon foot print to curb climate change.
(2) Market fancy - yes currently these stocks do enjoy. But how long ?.difficult to predict…In my view , it should enjoy market fancy at least for next few years or until 2030.
(3) Thin margins and high valuation - that is correct and it may continue for few more quarters or a year or two.
It is because for example - till date India is a net importer for Solar panel…however it is on a decline since last 6 Months due to import tariff imposed by India and PLI scheme to encourage Atma Nirbhar Bharat. China is the world leader in Solar panels Chinese Govt has been able to create the Eco-system over last 1-2 decades to become a low cost producer of many things - Solar panel , Coal gasification- Coal from commodity to chemicals , API for pharma and chemicals., EV to name a few.
We have just started now , but we seem to be moving very fast under the current Govt , though we need to be faster.
(4) It all depends upon one’s risk appetite. For medium to long term , i feel select renewables could be a good play. Consciously , I am avoiding Small Mid cap pure play renewables because of the margin challenges , capital requirement etc.in short term.
I prefer existing profitable business in large cap / PSU’s diversifying in to renewables, hydrogen and that is where I have made descent profit over the last couple of years.
And I would like to continue with the above strategy
I see many people exited from Large / Mid PSU from energy basket , railway and defence during recent corrections…But since I was sitting in descent profit in spite of 8-10% corrections , I did not exit. In fact I added in select PSU where I had earlier booked some profit .
I may wind up my PSU positions if there is a policy change with regards to current capex plans on renewables railway defence and Atma Nirbhar Bharat.
if the current Govt policy continues , there is nothing to get panic , there is still some steam left in select PSU with strong order book and earning visibility.
In any case I am getting regular income from dividends - 2-3 times a year.
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