Top 5 Microcap Nuclear Power Stocks to Watch Out in 2024

Nuclear energy is the fifth largest source of electricity in India, contributing nearly 3% of the total electricity generation.

At present, India's nuclear power generating capacity is 7,480 megawatts (MW), and the government plans to triple it to 22,480 MW by 2031 to meet its net-zero targets.

To this end, it is inviting private investments worth Rs 2.16 trillion (tn) and is already in talks with some major power sector players.

While the nuclear energy industry is set to grow, companies that supply to this industry will also benefit from it.

In this article, we have shortlisted five microcap stocks that supply or undertake EPC projects for the nuclear power sector.

Take a look...

#1 Patels Airtemp

First on the list is Patels Airtemp.

The company is engaged in the manufacturing of an extensive range of heat exchangers, condensers, separators, and compressors.

It also undertakes turnkey HVAC (heating, ventilation, and air conditioning) projects for its clients.

Through its diversified product portfolio, the company serves several industries, including oil and gas, petrochemicals, thermal power, nuclear power, chemicals, and fertilisers.

The company started catering to the nuclear power sector in 2017 after it got the N-Stamp authorisation for manufacturing pressure vessels and exchangers for nuclear plants. Patels Airtemp was the third organisation in India to get such authorisation.

Since then, the company's revenue has grown by a compound annual growth rate (CAGR) of 13.3%, driven by high volumes. The net profit also grew by a CAGR of 8.9%.

Patel Airtemp's products are critical components for nuclear reactors, and power generation facilities helping in heat transfer from one medium to another without mixing the two.

This helped the company secure high-value orders. As of October 2023, the company's order book stood at Rs 44.2 billion (bn).

Given the company's recent investment in a greenfield project to expand its manufacturing capacity, it will be able to cater to the orders, offering revenue visibility in the medium term.

To know more, checkout Patel Airtemp's financial factsheet and latest quarterly results.

Patel Airtemp (2018-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	1,517	2,393	2,560	3,043	2,828
Revenue Growth (%)		57.7%	7.0%	18.9%	-7.1%
Net Profit (Rs m)	73	113	114	124	112
Net Profit Margin (%)	4.8%	4.8%	4.4%	4.1%	4.0%
Return on Equity (RoE)	9.2%	12.6%	11.4%	11.2%	8.6%
Return on Capital Employed (RoCE)	17.3%	21.4%	20.5%	18.5%	18.4%

Data Source: Equitymaster

#2 Konstelec Engineers

Second on the list is Konstelec Engineers.

The company is engaged in offering EPC services in India and abroad.

It has completed over 250 projects of varying sizes and complexity for various industries, including power, oil and gas, steel, cement, ports, pharmaceuticals, and substations.

The company also undertook various projects for the nuclear power sector. It has executed control and instrumentation work and balance main plant electrical works for KAPP at the Nuclear Power Corporation of India.

It also offered construction power supply and area lighting for NFC Kota at Nuclear Fuel Complex.

Some of its clients are Bhabha Atomic Research Centre, Nuclear Power Corporation of India, NTPC, Adani Power, Tata Power Solar, and NALCO.

As of August 2023, the company has 50 orders worth Rs 5.6 bn from various sectors.

In the last five years, Konstelec Engineers' revenue has grown at a CAGR of 13%, driven by faster execution. The net profit also grew by a CAGR of 10.2% during the same period.

Given the company's long standing experience in offering EPC services, and a high order book, the revenue and profit are set to grow in the medium term.

To know more, checkout Konstelec Engineers' financial factsheet.

Konstelec Engineers Financials (2018-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	841	1,148	1,020	1,090	1,550
Revenue Growth (%)		36.5%	-11.1%	6.9%	42.2%
Net Profit (Rs m)	48	55	24	35	78
Net Profit Margin (%)	5.8%	4.8%	2.4%	3.3%	5.1%
Return on Equity (RoE)	11.7%	11.1%	4.7%	6.5%	12.6%
Return on Capital Employed (RoCE)	22.2%	22.1%	13.1%	14.2%	23.6%

Data Source: Equitymaster

#3 AMIC Forging

Third on the list is AMIC Forging.

With an installed capacity of 12,600 metric tonnes (MT) and capacity utilisation of 85%, the company serves several industries, including heavy engineering, steel, oil and gas, refineries, thermal power, and nuclear power.

It is planning to pursue backward integration and intends to setup a new foundry for casting quality forged ingots induction furnace.

This will help the company cut down its costs and maintain the quality of its products.

In the last three years, its revenue has grown at a CAGR of 64.3% on account of high growth in volumes. The net profit also grew at a CAGR of 153.7% during the same period.

Going forward, high capex across user industries is expected to drive the revenue and net profit growth of AMIC Forging.

To know more, checkout AMIC Forging's financial factsheet.

AMIC Forging Financials (2020-2023)

	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	264	714	1,168
Revenue Growth (%)		170.5%	63.6%
Net Profit (Rs m)	6	9	98
Net Profit Margin (%)	2.1%	1.2%	8.5%
Return on Equity (RoE)	8.3%	11.3%	49.4%
Return on Capital Employed (RoCE)	10.1%	10.8%	57.9%

Data Source: Equitymaster

#4 DP Wires

Next on the list is DP Wires.

The company is engaged in manufacturing steel wires, and plastic film sheets. It also trades in plastic products and generates electricity through windmills.

The company's products find use in various industries, including oil & power, automotive, construction, and infrastructure projects such as dams, bridges, metro, railways, and nuclear power plants.

It has a manufacturing facility with a capacity of 80,000 tons per annum and a strong distribution network in eight cities catering to over 100 clients.

The company has long standing relations with all its clients such as Nuclear Power Corporation of India, L&T, National Highways Authority of India, NTPC, and various city metro project corporations.

In the last five years, the company's revenue has grown at a CAGR of 29.6%, driven by strong growth across all segments. The net profit also grew by a CAGR of 18.7% during the same period.

Currently, it is undertaking capacity expansion at its existing manufacturing facility to cater to the growing demand for its products.

Going forward, the company plans to focus on maximising its capacity utilisation, expanding in new markets, and exploring new geographies to grow its revenue and profits in the medium term.

To know more, checkout DP Wires' financial factsheet and latest quarterly results.

DP Wires Financials (2018-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	3,341	2,861	4,692	6,160	12,213
Revenue Growth (%)		-14.4%	64.0%	31.3%	98.3%
Net Profit (Rs m)	174	167	241	291	410
Net Profit Margin (%)	5.3%	5.9%	5.2%	4.7%	3.4%
Return on Equity (RoE)	21.2%	16.9%	19.6%	19.1%	21.4%
Return on Capital Employed (RoCE)	31.5%	23.4%	26.7%	26.6%	29.8%

Data Source: Equitymaster

#5 Kirloskar Electric Company

Last on the list is Kirloskar Electric Company.

The company manufactures AC Motors, DC motors, transformers, switchgear, and electronics and caters to power generation, transmission and distribution, transportation, renewable energy, sugar, steel, cement, and allied industries.

It also supplies its products to the nuclear power and defence sectors.

Some of its clients are Jindal Group, Aditya Birla Group, BHEL, NTPC, HPCL, and Nuclear Power Corporation of India.

In the last five years, the company' revenue has grown at a CAGR of 6.7% driven by high volumes. The company also turned profitable and reported a profit of Rs 311 million (m) as against a loss of Rs 279 m five years ago.

Going forward, the high demand for power is expected to drive the demand for its products from user industries.

To know more, checkout Kirloskar Electric Company's factsheet and latest quarterly results.

Kirloskar Electric Company Financials (2018-2023)

	2018-2019	2019-2020	2020-2021	2021-2022	2022-2023
Revenue (Rs m)	3,622	4,037	2,854	4,537	5,019
Revenue Growth (%)		11.5%	-29.3%	59.0%	10.6%
Net Profit (Rs m)	-279	453	-481	674	311
Net Profit Margin (%)	-9.5%	14.4%	-17.3%	20.1%	6.6%
Return on Equity (RoE)	30.5%	-95.6%	-143.6%	88.7%	33.8%
Return on Capital Employed (RoCE)	-107.6%	-3424.9%	-31.8%	129.1%	58.3%

Data Source: Equitymaster

Should You Invest in Nuclear Power Stocks?

Nuclear power is one of the cleanest sources of energy in the world. Despite this, it only accounts for 3% of India's electricity generation.

This ensures a high scope of growth for the companies directly and indirectly involved in this sector.

However, it is important to treat nuclear power companies with the same caution as other companies.

You must do your due diligence and choose only fundamentally strong companies for your portfolio.

Remember that only fundamentally strong companies have the potential to give high returns in the long term.

Happy Investing!

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...