Play renewable energy theme indirectly with Elecon Engg, Shanti Gears: Parag Thakkar

In a chat with ET Now, Parag Thakkar, Head Institutional Sales, HDFC Securities, shares his views on how to play renewable energy theme.

ET Now: How will you play wind power stocks? There is only company Suzlon right now. I remember one of your earlier conversation with me where you mentioned that it is a long term story. The base is Rs 20, but a lot more has happened already including the equity dilution. Therefore, the uptick may not be as strong. You mentioned that you like wind power. But, how will you play?

Parag Thakkar: After our earlier conversation, we came across a news of Adani Power awarding a large order to Suzlon.

Things have changed since then. The government has restored the tax window for renewables. Therefore, renewable is a good play in my view.

ET Now: Ok. how would you play with Suzlon?

Parag Thakkar: Suzlon is just one of the way to play wind energy theme.

The other way, which is little bit interesting, is playing with companies which supply gears to say wind and solar companies.

These include Elecon Engineering and Shanthi Gears. In the same way, there is a company called HBL Power which supplies nickel cadmium batteries to these guys. So, there are indirect ways of playing these stories. This is where you can get earning levers much before as they already have capacities.

ET Now: Which is the strongest indirect wind power play?

Parag Thakkar: I would rather call it an industrial play, a capex cycle play. It is because all these companies do not cater to just one sector.

They are supplying to wind, they are supplying to solar, they are supplying to coal mining. I would say Elecon Engineering is one of them, I would say Shanthi Gears is one of them, HBL Power too is one can be looked at. Elecon is running at a utilisation rate of 40 per cent.If the utilisation picks up, there is a huge incremental ROE which can come up and there is no need of capex. -----------------