Thinking Outside the Tank: 9 Offbeat Green Hydrogen Stocks to Diversify Your Portfolio

Green hydrogen is increasingly recognized as a game-changing solution within the power sector. It holds the potential to completely revolutionize energy systems as we know them.

As countries push for ambitious climate goals, the evolution of green hydrogen technologies and declining production costs could drive a global clean energy shift.

The Indian government is stepping up its game, placing a strong emphasis on green hydrogen. With recent incentives, it's offering up to half a million tons of annual capacity, opening doors for companies to seize exciting opportunities.

While investors may be well-acquainted with giants like Reliance and Adani, it's crucial to also highlight smaller players ready for swift expansion.

Keeping this in mind, we spotlight 10 such companies primed to capitalize on the green hydrogen investment surge.

#1 CESC

First on our list we have CESC.

CESC is an integrated power utility that generates and distributes electricity across 567 square kilometres of its licensed area in West Bengal, catering to over 4 m customers. The company boasts a total capacity of 2,143 megawatts (MW).

Apart from this, the company, through its subsidiaries, has a portfolio of independent power generation projects and distribution ventures in other parts of the country.

A majority of the company's capacity (95%) is under long/medium-term power purchase agreements (PPAs) with fuel security which guarantees a predictable revenue stream with fixed electricity prices, shielding it from volatile fuel costs while minimizing default risk.

This translates to smoother cash flow, reduced financial volatility and stronger investor confidence, all of which empower CESC to make strategic decisions and fuel future growth with remarkable stability.

While coal-fired power plants remain CESC's core business, the company is actively diversifying its portfolio to renewable energy. It is acquiring land for setting up a solar-wind hybrid portfolio in Gujarat.

CESC Projects, a subsidiary of CESC, has won a bid to build India's largest green hydrogen plant (10,500 tonnes/year) under a government scheme. This pilot project is expected to launch within 3 years, paving the way for future expansion in clean hydrogen production.

This innovative project, a first for the RP-Sanjiv Goenka Group (CESC's parent), will utilize renewable energy to produce clean hydrogen fuel.

This aligns with the national Green Hydrogen Mission and positions CESC as a leader in this emerging clean energy sector.

CESC's green hydrogen venture signifies its commitment to sustainability and future-proofing its business. This strategic move positions the company for long-term growth in the growing energy landscape, balancing its strengths with exciting green technology advancements.

CESC Financial Snapshot (2019-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	2.10%	14.10%	-4.00%	7.60%	13.40%
Operating Profit Margin (%)	29.30%	28.50%	30.40%	26.40%	18.10%
Net Profit Margin (%)	10.60%	10.80%	11.70%	11.20%	9.80%
Return on Capital Employed(%)	14.00%	13.90%	13.10%	12.90%	11.90%
Return on Equity (%)	13.00%	14.20%	14.10%	13.90%	13.10%

Data Source: Ace Equity

Between 2019-2023, the business has grown, with the sales and net profit growing at a CAGR of 6.4% and 8.6%, respectively. The return on equity (RoE) and return on capital employed (RoCE) have reported a 5-Yr average of 13.6% and 13.2%, respectively.

The stock is trading at a price to book value ratio (P/BV) of 1.4x, a 40% premium to its 5-year P/BV of 1x.

To know more about the company, check out its factsheet and latest quarterly results.

#2 Engineers India

Next on our list is the government-owned Engineers India.

Engineers India is a leading global engineering consultancy and EPC (engineering, procurement and construction) company. It is a one-stop shop for project management, consultancy and engineering services catering to the hydrocarbon, petrochemicals, fertilizers and infrastructure.

The company's experience with hydrogen and ammonia projects, both on the technical side and execution side, positions them well to offer valuable services to manufacturers and operators venturing into green hydrogen.

Looking ahead, Engineers India is confident that the Indian government's recent push for green hydrogen, with incentives for up to half a million tonnes of annual capacity, will open exciting doors for the company.

While the policy is still under public consultation, once finalized, it will likely lead to large-scale aggregation and demand generation. This will give Engineers India a leg up in the form of economies of scale. Apart from this, the PLI (production linked incentive) scheme for electrolyzers will also kick up the activity, benefiting the EPC player further.

At present, renewable energy projects account for 7-8% of total revenues. However, considering the scope of green hydrogen and other renewable energy projects, the company is targeting 15-20% over the next few years.

Enigneers India Financial Snapshot (2019-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	34.50%	29.50%	-4.80%	-10.00%	17.70%
Operating Profit Margin (%)	24.20%	22.00%	17.20%	16.30%	14.20%
Net Profit Margin (%)	15.10%	13.40%	8.30%	11.80%	10.30%
Return on Capital Employed(%)	24.60%	28.90%	17.40%	25.70%	24.00%
Return on Equity (%)	15.90%	18.30%	12.60%	19.50%	18.40%

Data Source: Ace Equity

Between 2019-2023, the business has grown, with the sales growing at a CAGR of 11.9%. The 5-Yr average RoE and RoCE stand at 16.9% and 24.1%, respectively.

The stock is trading at a P/BV of 5.7x, a 147% premium to its 5-year P/BV of 2.3x.

To know more about the company, check out its factsheet and latest quarterly results.

#3 NLC India

Third on our list is NLC India.

NLC India is a power generation and mining company, owned by the Government of India. At present, a large part of the business comes from power generation (more than 80% of revenues) whereas the balance is from lignite (brown coal) mining.

The company boasts a total power generating capacity of 6 gigawatts (GW), 23% of which comes from renewable sources of energy such as solar and wind and balance thermal.

Going forward, the company aims to enhance its renewable energy portfolio. It has outlined a capex of Rs 827 billion (bn) by 2030 to scale up its power generation capacity to 17 GW. Out of the 17GW, 6 GW will be renewable-based and the balance 11 GW from conventional.

NLC India has already invested in green hydrogen with a pilot project underway. The company has issued a consultancy order to Engineers India for its 4 MW green hydrogen plant This positions them ahead of the curve, capitalizing on early mover benefits.

Their existing lignite infrastructure, power plants, and land resources can be strategically repurposed for green hydrogen production, offering a cost-effective advantage.

NLC India Financial Snapshot (2019-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	-9.20%	7.60%	1.80%	6.30%	38.60%
Operating Profit Margin (%)	32.40%	45.70%	48.30%	39.80%	43.70%
Net Profit Margin (%)	15.60%	14.10%	13.30%	9.30%	8.80%
Return on Capital Employed(%)	10.90%	9.60%	8.70%	9.30%	8.30%
Return on Equity (%)	11.80%	11.30%	10.00%	8.10%	9.70%

Data Source: Ace Equity

Between 2019-2023, the company's sales have grown at a CAGR of 7.9%. The returns have been rangebound, with the RoE and RoCE averaging at 10.1% and 9.4% over five years.

The stock is trading at a P/BV of 4.1x, a 400% premium to its 5-year P/BV of 0.9x.

To know more about the company, check out its financial factsheet and latest financial results.

#4 Confidence Petroleum

Fourth on our list is Confidence Petroleum.

Confidence Petroleum manufactures liquified petroleum gas (LPG) cylinders and supplies auto LPG in India with its network of bottling plants and auto LPG dispensing stations across India.

Confidence Petroleum announced its foray into the burgeoning market of green hydrogen with the manufacturing of type four cylinders. This cylinder is being manufactured by 'Silversky Exim Pvt Ltd', a subsidiary of its subsidiary company Confidence Futuristic Energetech.

The company, through the production of these cylinders, is set to revolutionize the hydrogen/nitrogen/CNG storage industry and harness the power of green hydrogen.

This foray signifies Confidence group's commitment to spearheading the global energy transition towards a cleaner and greener future. By prioritizing innovation and environmental stewardship, the company aims to revolutionize the hydrogen storage industry and promote sustainable energy solutions.

Looking ahead, the company aims to become a fully integrated energy player in the country. It aims to expand its auto LPG dispensing stations (from 248 in fiscal 2023 to 500 in fiscal 2025), CNG stations (from 32 in fiscal 2023 to 200 in fiscal 2025) and LPG sales volumes (from 14,000MT in fiscal 2023 to 25,000MT fiscal 2025) by fiscal 2025.

Confidence Petroleum Financial Snapshot (2019-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	13.50%	3.70%	-11.00%	18.40%	79.00%
Operating Profit Margin (%)	25.80%	27.40%	29.60%	26.80%	20.00%
Net Profit Margin (%)	6.90%	8.60%	10.60%	3.20%	8.40%
Return on Capital Employed(%)	12.20%	7.80%	12.90%	6.40%	19.00%
Return on Equity (%)	10.90%	13.10%	13.40%	4.60%	20.70%

Data Source: Ace Equity

Between 2019-2023, the company's revenue and net profit have grown at a CAGR of 29.4% and 27.1%, respectively. The 5-Yr average RoE and RoCE stand at 13.8% and 17.5%, respectively.

The stock is trading at a P/BV of 3x, a 7% premium to its 5-year P/BV of 2.8x.

To know more about the company, check out its financial factsheet and latest financial results.

#5 Gensol Engineering

Fifth on our list is Gensol Engineering.

Gensol Engineering, India's premier solar EPC company, boasts a substantial engineering portfolio totaling 33,956 MW portfolio that has cemented its position as a leading player in the industry. The company caters to the domestic as well as the international market. Apart from this the company also leases EVs.

Now, Gensol Engineering is foraying into the realm of green hydrogen, securing its inaugural Green Hydrogen project.

The company recently informed investors that it emerged as the lowest bidder for NHPC's Kargil Green Hydrogen Mobility Station EPC Project. Additionally, the company successfully won a bid under the Central government's production-linked incentive (PLI) scheme for the manufacturing capacity of an advanced electrolyser plant.

This strategic move positions Gensol Engineering to play a significant role in India's ambitious target of producing 5 m metric tons of green hydrogen annually by 2030.

Apart from venturing into EPC projects for green hydrogen, the company is further diversifying into EV manufacturing and leasing, aiming to spend over Rs 1.2-1.3 bn in fiscal 2025.

While this allows for multiple revenue streams and reduced reliance on a single sector the company runs the risk of spreading itself too thinly across too many sectors or projects. Eventually this can lead to inefficiencies, lack of expertise in any one area and increased complexity in management. However, it's premature to pass judgment on this potential risk at present.

The company aims to spend an additional Rs 9 bn in purchasing vehicles for its EV leasing business in fiscal 2025.

While the debt to equity is very high at 2.5, the company has announced raising up to Rs 3 bn via qualified institutional placement.

At present, the company boasts an impressive order book exceeding Rs 10 bn. Gensol Engineering's leadership in the solar energy sector stems from its robust expertise in design engineering and its stellar track record of success.

Gensol Engineering Financial Snapshot (2019-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	20.90%	-0.80%	-22.60%	151.40%	144.70%
Operating Profit Margin (%)	12.50%	8.50%	10.90%	13.20%	16.00%
Net Profit Margin (%)	7.90%	2.70%	5.00%	6.90%	6.30%
Return on Capital Employed(%)	67.90%	16.20%	12.20%	22.60%	11.90%
Return on Equity (%)	67.90%	9.60%	9.20%	26.90%	19.40%

Data Source: Ace Equity

This is visible in the business performance reported in the past few years. Between 2019-2023, the company reported a CAGR of its revenue and net profit of 41.6% and 36.6%, respectively. The 5-Yr average RoE and RoCE stand at 26.5% and 26.2%, respectively.

The stock is trading at a P/BV of 14.6x, a 87% premium to its 5-year P/BV of 7.8x.

To know more about the company, check out its financial factsheet and latest financial results.

#6 Advait Infratech

Sixth on our list is Advait Infratech.

Advait Infratech's operations span various verticals, including turnkey telecommunication projects, the installation of power transmission and substation equipment, liasoning and marketing.

Apart from this, the company also manufactures optical fibre ground wire (OPGW), OFC cables, aluminium-clad steel wire, emergency restoration systems and OPGW joint boxes.

In 2023, the company forayed into sustainable energy via manufacturing electrolysers and fuel cell assembly, the principal equipment for manufacturing green hydrogen.

Recently, the company announced signing Memorandums of Understanding (MoU) with the Government of Gujarat.

It announced the signing of MoUs with the Government of Gujarat, marking a significant stride forward. These MoUs entail a proposed investment of Rs 450 million, solidifying the company's commitment to innovation and bolstering its presence in the state.

Under the first MoU, Advait Infratech will engage in the manufacturing and assembly of fuel cells and electrolysers at Kadi, Mehsana, Gujarat, in 2024. The second MoU focuses on the design, manufacturing, testing, and supply of an Emergency Restoration System at the same location during the same year.

Apart from this, the company with KPI Green Energy inked a Memorandum of Understanding (MoU) with the government of Uttarakhand. This landmark agreement is set to pave the way for the establishment of a colossal 500 MW solar park under the captive power producer (CPP) segment.

Advait Infratech Financial Snapshot (2019-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	-37.10%	60.60%	47.40%	18.40%	31.00%
Operating Profit Margin (%)	15.50%	13.20%	10.20%	15.00%	17.90%
Net Profit Margin (%)	8.90%	1.20%	7.30%	6.80%	7.90%
Return on Capital Employed(%)	19.00%	15.50%	15.30%	23.40%	27.10%
Return on Equity (%)	14.10%	2.80%	18.50%	15.30%	19.90%

Data Source: Ace Equity

Between 2019-2023, the sales and net profits have registered a CAGR of 18.2% and 5.4%, respectively. The returns have also been rangebound with the RoE and RoCE averaging at 14.1% and 20% over a 5 year period.

Going forward, the company plans to bolster its position in the green hydrogen space by expanding its renewable energy capacity.

The stock is trading at a P/BV of 22.9x, a 275% premium to its 5-year P/BV of 6.1x.

To know more about the company, check out its financial factsheet and latest financial results.

#7 Inox India

Seventh on our list is Inox India.

Inox India produces cryogenic apparatus, holding a prime position among the global leaders in cryogenic tank manufacturing.

With a history of more than three decades, the company specialises in providing comprehensive solutions including design, engineering, manufacturing and installation of equipment and systems tailored for cryogenic environments.

The company's offerings encompass cryogenic tanks and systems for the storage, and transportation of industrial gases such as oxygen, nitrogen, argon, hydrogen and carbon dioxide.

Since 1999, Inox India has been offering end-to-end solutions for liquid hydrogen storage and transportation, available in all sizes.

Now, with the global focus shifting towards green hydrogen, the demand for the company's products to store and transport hydrogen is only expected to rise.

Going forward, the company plans to capitalise on these opportunities in the green hydrogen sector as part of the global clean energy transition.

To broaden its international presence, the company plans to expand their standard cryogenic and non-cryogenic equipment business into global markets. Recently, Inox India exported hydrogen tanks to a company in South Korea. As of September 2023, exports accounted for more than 60% of the total revenues.

Looking ahead, the company aims to enhance its domestic business and develop a strong export business. It aims to expand organically and inorganically, having spent Rs 800 m as of September 2023.

Inox India Financial Snapshot (2019-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	29.00%	-6.60%	-10.80%	30.20%	22.50%
Operating Profit Margin (%)	24.30%	27.10%	25.40%	24.10%	23.10%
Net Profit Margin (%)	26.50%	14.20%	16.40%	16.70%	15.80%
Return on Capital Employed(%)	43.40%	35.70%	32.60%	36.10%	38.10%
Return on Equity (%)	168.90%	37.60%	29.90%	29.90%	29.00%

Data Source: Ace Equity

Between 2019 and 2023, the sales and net profits have registered a CAGR of 11.4% and 157%, respectively. The returns have also been rangebound with the RoE and RoCE averaging at 59.7% and 37.1% over 5 years.

The stock is trading at a price to earnings ratio of 57x.

To know more about the company, check out its financial factsheet and latest financial results.

#8 John Cockrill India

Ninth on our list is John Cockerill.

John Cockerill India is a subsidiary of the Belgian-based John Cockerill. Much like its parent, the company caters largely to the ferrous (steel industry) and non-ferrous offering designing, manufacturing and commissioning of cold rolling mill complexes, processing lines, chemical equipment, industrial furnaces and auxiliary equipment.

The company runs facilities in India and enjoys a global footprint across Asia, Africa, the Middle East, Europe, North America and South America.

With the growing emphasis on environmental goals, the Indian unit of John Cockerill finds itself presented with opportunities to offer solutions for the decarbonization of the steel manufacturing process and the utilization of green hydrogen in steelmaking.

Furthermore, the Government's announcement of the PLI scheme for speciality steel should unlock fresh prospects for the company in this product category.

John Cockerill India Financial Snapshot (2019-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)	59.00%	-25.20%	-48.20%	93.50%	29.10%
Operating Profit Margin (%)	10.70%	10.10%	-12.60%	4.20%	4.80%
Net Profit Margin (%)	7.10%	6.40%	-14.70%	1.20%	2.70%
Return on Capital Employed(%)	27.00%	16.10%	-15.70%	6.30%	9.70%
Return on Equity (%)	20.10%	11.90%	-15.20%	2.60%	6.90%

Data Source: Ace Equity

Between 2019-2023, the sales and net profits have registered a CAGR of 8.9% and 13.9%, respectively. The returns have also been rangebound with the RoE and RoCE averaging at 5.3% and 8.6% over 5 years.

The stock is trading at a P/BV of 7.7x, a 156% premium to its 5-year P/BV of 3x.

To know more about the company, check out its financial factsheet and latest financial results.

#9 KPI Green Energy

Last on our list is KPI Green Energy.

KPI Green Energy is a power-generating company in Gujarat, backed by decades of invaluable experience in the renewable energy sector. The company has a total capacity of 346MW as of the first half of fiscal 2024 and aims to reach 1,000MW by 2030.

As a leading Independent Power Producer (IPP), the company is a reliable supplier of renewable power to esteemed business houses through PPAs accounting for 18% of revenues as of the first half of fiscal 2024.

The balance 82% of revenues come from Captive Power Producer (CPP) customers. KPI Energy is a trusted player in the renewable energy sector, specializing in developing, transferring, operating, and maintaining grid-connected solar power projects for our valued CPP customers. Through the CPP model, it offers the opportunity to own solar and hybrid power projects tailored to meet their specific requirements.

KPI Green Energy, via its subsidiary, KPF Green Hydrogen & Ammonia Technology Private, is in the business of green hydrogen & ammonia with a vision to be a global leader in the supply of clean energy. It specializes in providing on-site green hydrogen plants tailored to meet continuous demand, incorporating renewable energy setups at suitable locations.

Additionally, it offers bulk deliveries of high-purity green hydrogen via versatile cascade trailers, customized to meet diverse customer requirements. Furthermore, the services extend to supporting application development across various sectors for sustained demand.

KPI Green Financial Snapshot (2019-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue Growth (%)		72.10%	74.50%	122.70%	179.50%
Operating Profit Margin (%)	44.70%	46.00%	62.00%	48.00%	32.90%
Net Profit Margin (%)	25.80%	10.90%	13.90%	18.80%	17.00%
Return on Capital Employed(%)	12.00%	10.50%	16.20%	22.90%	29.70%
Return on Equity (%)	9.00%	6.50%	13.70%	32.50%	53.30%

Data Source: Ace Equity

Between 2019 and 2023, the sales and net profits have registered a CAGR of 107% and 87%, respectively. The returns have also been rangebound with the RoE and RoCE averaging at 22.3% and 18.3% over 5 years.

The stock is trading at a P/BV of 21.3x, a 2x premium to its 5-year P/BV of 6.8x.

To know more about the company, check out its financial factsheet and latest financial results.

In conclusion

With continuous innovation, supportive policies and growing demand, the green hydrogen landscape in India is poised for exponential growth.

Keep these under-the-radar players on your watchlist, as they could become the next big names in the clean energy space. But despite the prospects of strong returns, ensure that you study the fundamentals and understand their growth potential.

Do your homework, then invest smartly!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...