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The share prices of listed solar cell and module manufacturing companies have been going up in recent months. This is attributed to the Government’s promise that the central public sector undertakings have large solar power development programmes and they will all buy only from domestic manufacturers.
A slew of record highs The shares of Hyderabad-based Surana Ventures had touched an all-time high of ₹96 on September 19, from ₹15.25 on May 15. On Monday, it closed at ₹93.
Similarly, Moser Baer had risen to ₹8.05 on Monday from ₹3.98 on May 15, after touching a peak of ₹12.85 on July 11. Indo Solar moved to around ₹7 on Monday from ₹2, after peaking at ₹9.20 on July 8.
The recent developments in the solar power sector in the country explain the rally in these stocks. The Government, through the vehicle of the Jawaharlal Nehru National Solar Mission, has just rolled out its latest round of project awards, of 750 MW.
The project awardees were selected on the basis of the least demand for a Government capital subsidy, called ‘viability gap funding’, so as to make the projects viable for selling electricity at a pre-fixed tariff of ₹5.45 a kWhr. Half of the capacity (i.e. 375 MW) has been reserved for projects using locally produced cells and modules. Modules are semi-conductor material bearing cells strung together or panes of glass coated with semi-conductors. They generate direct current when sunlight falls on them.
The Ministry of Commerce, acting on a petition filed by the domestic solar equipment manufacturers, announced in May that it had found evidence of dumping (selling below cost) by Chinese, Taiwanese, Malaysian and US companies and recommended stiff anti-dumping duties. It was left to the Ministry of Finance to formally bring the duties into force.
Blow and hug But last month, the Ministry of Finance let the recommendations expire, effectively meaning ‘no anti-dumping duties’. This would have been a big blow for domestic manufacturers such as Surana Ventures, Moser Baer and Indo Solar, but then the Government promised these manufacturers that they would have enough demand from the central PSUs.
HR Gupta, Managing Director of Indo Solar, finds this promise “entirely credible”. The PSUs have large solar programmes. NTPC, for instance, intends to develop 3,000 MW of solar, over time. (The solar power installations in the entire country are slightly less than that.) This comes at a time when the global glut in solar modules is receding and supplies are tightening.
Dragon’s appetite The global shortage is mainly due to big demand from China. The Indian market is yet to see the impact of the global tightening of supplies and some observers see this as a potential upside to stocks. “Due to extremely competitive pricing in India, some Chinese suppliers are known to have shifted their focus away from the country,” says Jasmeet Khurana, Senior Manager — Consulting, Bridge-to-India, an India-focused solar think tank. “This has not yet impacted the availability of modules at the expected prices in the country,” Khurana told BusinessLine .
For now, the domestic manufacturers are busy gearing up to cater to the promised demand from the PSUs. Indo Solar is expanding it cell capacity from 200 MW to 450 MW, in phases.
Surana Ventures, which plans to also put up solar power projects and sell energy, is putting up a new cell line.
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