The Government of India has formed a high powered panel to look into replacing the usage of diesel powered gensets by Renewable Energy in Telecom Towers.India has around 300,000 Telecom Towers most of which are powered by expensive diesel generators.The reason is that a lot of the telecom towers are situated in far flung areas where the grid does not exist.Also the power supply in India is erratic and not reliable with 10 hour electricity blackouts not an infrequent occurrence.In these cases a backup supply of electricity supply is badly needed.Diesel Generators are the most popular form with Diesel heavily subsidized by the government in comparison to normal petroleum.Also Diesel Generators are widely available without huge capital costs.
However Tecpro Systems differs from the other 2 IPOs in the sense that it is primarily focused on the Power Sector Space.It is a leader in the ash handling and material handling systems and is currently diversifying into becoming a turnkey provider in this segment.Like other infrastructure players it has seen amazing growth in the last 3 years at around 70%+.Its margins have come down and stabilized at around 7%.Cash Flow have been negative due the breakneck growth and the high WC requirements of the Construction Sector.The valuation does not seem expensive with the promoters diluting around 15% of the company.
This EPC company seems a good investment to me though not as good as VA Tech Wabag.The valuation at around 17x P/E is not very expensive though the sector concentration increase the risk for the company.However given the management quality,this company seems a better investment that other construction companies.The growth prospects of the Power Sector in India is huge and Tecpro seems well positioned in this space with partnerships with other major companies like Va Tech Wabag.Though there is some concentration risk,I think Tecpro seems a subscribe.
Electrosteel Integrated is coming out with an IPO to raise around $50mm to fund its 2.2 million ton plant in Jharkand,India.The company is promoted by its listed parent Electrosteel Castings which has been running for the past 30 years and is leader in the Ductile Pipe Category.This company will have ECL holding of 34% post IPO with the other major shareholders being a bunch of PE firms and Stemcor.The plant construction will require around $1.5 billion capex out of which around 40% has been already been spent.Debt will be around $1.1 billion mostly at 12.25% interest rate.
The company has pluses as well as risks,however the plant should start operating in Oct 2010.While the investment is risky,the valuation being offered is cheap with good promoters.For people looking at lesser risk,ECL the parent company also makes a lot of sense.It is trading at 8x trailing P/E and around 1 P/Bx which is again cheap.It has a 34% share in the new company so will gain from any upside as well.Its investment in the company is Rs 700 crore with a total market cap of around Rs 1600 crore.Not expensive and a safer way to invest in
Algae Based Biofuels as a Green Investing Opportunity is still some years away as the technology is still quite nascent.Despite a lot of hoopla and a number of IPO’s with synthetic biofuels as business,large scale commercial production and profits are still some time away.However the promise of this technology to revolutionize the Fossil Fuel powered Transportation Sector is Huge.Large Oil and Gas is already positioning itself in a small way to take advantage of this opportunity.Shell has been the biggest investor in Biofuels with a $12 Billion tie up with Brazilian Sugar Giant Cosan.Valero has also smartly invested in a number of biofuel startups despite being one of the strongest opponents of Green Energy.Exxon has only promised huge investments without investing much till date.
Organization of the Petroleum Exporting Countries (OPEC) on its 50th Anniversary has called the Developed Nations Subsidies as “Unfair” and has referred Alternative Energy as the biggest challenge facing the Rich Oil Exporting Nation Cartel.OPEC is being a huge hypocrite as Fossil Fuels Subsides totalled $550 Billion last year which is almost 12x the Subsidies given to Green Energy.However no mention of this fact was said as these Green Subsidies were “not acceptable” OPEC.The OPEC Chief Abdalla el-Badri wanted a level playing field with this nascent Green Energy.OPEC is a 12 Nation Club formed mostly of Middle Eastern Nations who control 80% of the Global Oil Reserves and 33% of the Production.Saudi Arabia is the non-official leader of this Cartel and has been known for its opposition to Climate Change efforts.The other nations too support Saudi Arabia recently blocking a group of Poor Island Nations from accessing climate change data.These Nations have shockingly asked for Aid as Global Warming Concerns reduce the Fossil Fuel Demand.Most of the Middle East Exporters are filthy rich generating huge amounts of cash from the Export of Fossil Fuels.
The US Congress had got into the act in 2009 through 2 Bills to regulate the Hydraulic Fracking Process and told EPA to study the process.The Stakes are high for the Oil and Gas Companies as Shale Gas represent a Huge Opportunity.North America has been a pioneer in this Technology with Shale Gas Extraction expected to spread rapidly in different parts of the world.The EPA Study and US Regulations will be watched closely by other countries which are formulating their own regulations in this regard.