Top 4 Nuclear Energy Stocks in India

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 we strive to meet this demand, we're faced with a pressing challenge to lower carbon dioxide emissions.

In recent years, India has been making significant strides in transitioning from coal-based power to renewable energy sources.

While coal still remains a major component of India's energy mix, the country has been actively expanding its renewable energy capacity to reduce its reliance on fossil fuels and combat climate change.

India has country 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 top stocks that are present in the nuclear energy space in India.

Read on...

#1 Tata Power Ltd

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 100,000 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, 443 MW waste heat recovery /BFG, 3,191 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.

Coming to the financials, Tata Power reported a 11.5% revenue growth in FY24 with operating profit growing at 26%. EBITDA margins also improved roughly 200 bps to come in at 17.7%.

Going forward, the management has guided for improved financial performance with a focus on renewable energy projects despite industry challenges.

The stock is up 93% in the last one year due to strong operational performance.

#2 Power Mech Projects Ltd

Power Mech Projects Limited, incorporated in 1999, is an engineering and construction company providing integrated service 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 helps in building turbines and generators for power projects.

The company derives 89% of its revenues from India and the balance 11% from exports.

Power Mech boasts of a distinguished clientele ranging from Adani power, BHEL, Larsen & Toubro, Tata Power, and NTPC in the domestic market and Mitsubishi, Siemens, and Hyundai in the international market.

As of FY24 end, the company has an orderbook of Rs 570 bn including 2 contracts worth Rs 400 bn executable over the next 25 years.

In October 2023, the company raised Rs 3.5 bn via issue of 900,000 shares on a QIP basis.

Coming to the financials, the company reported a robust revenue growth of 16.8% in FY24 along with EBITDA growth coming in at 24.5%. EBITDA margins also improved to 11.8% in FY24.

Going ahead, the management has guided for strong revenue growth in excess of 30% for the next 2 years on the back of strong orderbook. The management has also guided for improving EBITDA margins going ahead.

Power Mech stock is up 65% in the last one year on the back of sustained financial performance.

#3 BHEL

Bharat Heavy Electricals Ltd 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 is the flagship engineering and manufacturing company of 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 about 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.

Coming to the financials, BHEL reported a meagre 3.5% growth in its consolidated revenues. EBITDA fell 19.6% in FY24. EBITDA margins deteriorated significantly to come in at 2.6%.

Shares of BHEL are up 43.3% since listing. Also, the stock is up by 12.1% in the past 1 month.

#4 Walchandnagar Industries Ltd

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 Ltd 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.

WIL 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.

Coming to the financials, Walchandnagar reported 6.1% degrowth in consolidated revenues and 280% growth in EBITDA for financial year ended 31 March 2024. EBITDA margins came in positive at 0.4% compared to the previous year at -10.7%.

Shares of Walchandnagar Industries Ltd are up 270% in the last year. Also, the stock is up 45.1% in the past one month.

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 approximately 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 diving headfirst as nuclear power companies are capex heavy businesses and any downturn in the economic cycle can impact the profitability of these companies significantly.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...