Fundamentally Strong Smallcap Stock Forays into Green Hydrogen Sector

India's sun-drenched fields and windswept coasts are witnessing a silent revolution. The country's renewable energy juggernaut just smashed past the 180 GW mark, solidifying its position as the world's 4th largest player in both wind and solar.

As of November 2023, the country's renewable capacity surpassed 180 GW, with solar leading at 72 GW, wind at 45 GW, and large hydro at 47 GW, constituting over 40 per cent of the total installed capacity.

This rapid green surge isn't just powering homes and industries; it's electrifying stock markets and driving India's ambitious climate goals.

Renewable energy stocks had a dream run in 2023, with companies generating returns to the tune of 100-270%.

With green hydrogen space peaking up, most companies are taking a leap into it, and adding to this list is Man Industries.

About Man Industries

Man Industries is a flagship company of the Man Group, UK.

The company is engaged in the business of manufacturing, processing, and trading submerged arc-welded pipes and steel products.

It offers longitudinal submerged arc welded line pipes for use in oil, gas, petrochemicals, fertilizers, and dredging.

It also provides various options for coating systems, which include external coating systems, internal coating systems, and internal coating systems.

In the past year, the shares of the company have rallied over 300% on back-to-back project wins.

Hydrogen Transport Pipes

Man Industries, is making a strategic move into the burgeoning hydrogen market.

Recognizing the immense potential of clean hydrogen as a future energy source, the company has begun producing pipes specifically designed for hydrogen transportation.

This presents a massive opportunity, especially with the world moving towards net zero carbon emissions by 2050.

The hydrogen generation market in India is estimated to reach US$ 22-23 billion by 2030.

This is because hydrogen, as a source of clean energy, is expected to become more popular worldwide.

Man Industries has invested resources in research and development to make it compatible and make the most of the high-growth space.

Further, the company has recently announced the successful completion of pipe testing for secure hydrogen conveyance.

This milestone for Man Industries was accomplished in Italy by RINA Consulting - Centro Sviluppo Materiali SPA, affirming the sector's leadership in ensuring the safe and efficient transportation of hydrogen.

Man Industries is also meeting and holding discussions with Indian conglomerates that are looking to transition to green energy.

Government's Push

The Indian government is taking significant steps to promote and support the production of green hydrogen as part of its efforts to reduce carbon dioxide emissions and establish itself as a leading exporter in the sector.

The Indian government has unveiled a US$ 2 bn (Rs 160 bn) scheme to promote the production of green hydrogen fuel in the country.

Producers will receive incentives worth at least 10% of their costs to support the transition to renewable energy and reduce carbon emissions.

The government plans to offer incentives of at least Rs 30 per kg for green hydrogen production to cut manufacturing costs from the current Rs 300 per kg. The scheme will also allocate funds for manufacturing electrolysers that are essential for production.

The government intends to begin the bidding process soon and expects to support 3.6 m tonnes of hydrogen production capacity over the next three years.

The auctions will be conducted in tranches for green hydrogen supply and electrolysers. The government aims to gain market insights, foster technology adoption, and drive cost reductions in the sector.

India strives to achieve 50% of its electricity capacity from non-fossil fuel sources by 2030 and reach net-zero carbon emissions by 2070.

The scheme reflects the government's commitment to clean energy and its ambition to establish India as a significant player in the green hydrogen sector.

This ambition will further support the company's green hydrogen plan.

What Next?

Going forward, the company expects around Rs 40 billion (bn) top line in two years.

Man Industries has participated in large bids for new businesses in domestic and overseas markets and expects to receive incremental orders in the coming months.

With the softening of raw material prices, it expects better realizations in Q3 as well.

Additionally, the company is focusing on new product development to meet the evolving needs of its customers in the green hydrogen industry.

Being the pioneer, the company is likely to seek partnerships with other companies and research institutions to accelerate its green hydrogen development.

Conclusion

Man Industries plans to expand existing capacities to meet the growing demand.

Further, with the company earning significant of its revenue from offshore countries, it plans to enter more new markets.

Man Industries is well positioned to take advantage of this shift, as it has a strong track record of execution and a large network.

As the world increasingly pivots towards environmentally conscious practices, its commitment to expanding its focus on green hydrogen reflects its dedication to driving positive change in the global energy landscape.

With a robust foundation and a forward-thinking strategy, Man Industries is poised to play a pivotal role in shaping the future of sustainable energy on a global scale.

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