Industrial Update – Newsletter – January 2025
IMAP’s Industrials group brings you this monthly update with a focus on latest news, transactions and interesting snippets from the Industrials domain in India
Between 2024 and 2030, India is expected to add ~200 GW of total utility power capacity of which ~75% i.e. 150 GW will be from renewable energy sources:=
Within the renewable space, the contribution of utility level solar is expected to be 132 GW i.e. 66% of total addition or 88% of renewable capacity addition. At ~US$ 0.5 million per MW, this addition of solar capacity entails a total capex of US$66 bn by 2027 in generation alone. This large impending capex is driving interests across the 3 main segments of the solar space:
Independent Power Producers (IPP) – IPPs own the power project and contracts with the utility/end-consumer for power offtake. Despite the addition of large capacities, the sector is competitive with current bids (for pure solar) at Rs.2.5/unit with estimated biding equity IRR of 11% – 13%. The key IPPs in India currently include Adani Green (7.4 GW), Renew (5.5 GW), Tata Power (4.3 GW), NTPC (3.5 GW), Avaada (4.2 GW), SJVN (2.5 GW) and over 20 other players
Engineering, Procurement & Construction (EPC) – EPC players construct power projects for the IPPs. Prominent players include Sterling Wilson, Waaree Renewables, KPI Green and Vikram Solar. Key factors to consider while evaluating EPC players – party bearing module price risk (IPP vs EPC), exposure to domestic vs export market and % share of in-house projects being executed by the EPC
Component Manufacturers – Manufacture the various solar plant components – key being the solar cell and solar module. As of FY24, India has 7GW (going to 88 GW by FY27) of solar cell capacity and 70GW (going up to 160GW by FY27) of module manufacturing capacity. The solar cell value chain comprises:
Supportive policies for solar component manufacturing in India include (1) import tariffs (25% /40%) on solar cells/ solar modules (2) non-trade barriers such as ALMM and DCR and (3) PLI to support domestic manufacturing
The solar energy space in India is currently a high-growth sector with strong government support; while valuations for listed players currently seem rich, we are likely to see the emergence of some large players across the value chain
Some recent transactions
| Jan’25 | Volt Up | The EV battery swapping player raised ₹69 Cr in a fundraise led by EM Impact Capital |
| Jan’25 | Euler Motors | The EV truck and 3W manufacturer raised ₹173 Cr. in a fundraise led by responsAbility Partners |
| Jan’25 | Pegatron Technologies | Tata Electronics acquired a 60% stake in the Indian subsidiary of the Taiwan based EMS player |
| Jan’25 | Milk Mantra | Hatsun Agro, acquired 100% stake in the milk producer for ₹230 Cr. |
| Jan’25 | Minimalist | Hindustan Unilever acquired the skin and personal care product manufacturer for ₹2,670 Cr. |
| Jan’25 | Bgauss Auto | The EV 2-wheeler manufacturer raised ₹161 Cr. in a fundraise led by Bharath Value Fund |
Recent News
- The Indian budget 2025 saw the creation of National Manufacturing Mission to focus on 5 areas– ease of doing business, upskilling, MSMEs, availability of technology and quality products; budget also had an increase in allocations across sectors through the PLI scheme and a focus product scheme for India’s footwear and leather sector
- India’s manufacturing PMI rose to 58 in Jan’25 from 56.7 in the previous month as output and new orders rebounded from a relatively weak 3rd quarter; a PMI value above 50 indicates growth
- US announced a list of executive orders that will have an impact on businesses globally – import tariffs on China, Canada and Mexico, terminating funding for renewables under Biden’s Green New Deal, ending 50% EV goal for new cars and a push for conventional fuels
- In its efforts to localize production, Chinese networking company TP-link announced tie-up with Optiemus Circuits to manufacture TP-Link’s networking devices and smart home products in India
IMAP Industrials Index & Valuation of sub-segments
Commodity Prices Index
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