Fundamentally strong small cap firm enters green hydrogen sector

India's sun drenched fields and windswept coasts are witnessing a silent revolution. The country's juggernaut just zoomed past 180 GW, solidifying its position as the world's fourth largest player in both wind and solar power. The country's renewable capacity surpassed 180 GW last November, with solar (72 GW), wind (45 GW), and large hydro (47 GW) comprising more than 40% of the total installed capacity.

This surge in green power 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 of 100 270%. With the picking up, many companies are joining the fray.

One of them is Man Industries. A flagship company of the Man Group, UK, the company manufactures, processes, and trades submerged arc welded pipes and steel products. It offers longitudinal submerged arc welded line pipes for use in the oil, gas, petrochemicals, fertilisers, and dredging industries.

It also provides various options for external and internal coating systems. Over the past year, the shares of the company have rallied over 300% on back to back project wins. Man Industries is making a strategic move into the growing green hydrogen market. Having recognised the immense potential of clean hydrogen as a future energy source, the company has begun producing pipes specifically designed to transport hydrogen.

This presents a massive opportunity, especially with the world aiming for net zero carbon emissions by 2050. The hydrogen generation market in India is estimated to touch $22 23 billion by 2030. This is because hydrogen is expected to become a more popular source of clean energy worldwide. Man Industries has invested resources in research and development to help it make the most of this The company recently announced the successful completion of pipe testing for secure hydrogen conveyance.

This milestone was accomplished in Italy by RINA Consulting Centro Sviluppo Materiali SPA, affirming the sector's leadership in ensuring the safe and efficient transport of hydrogen. Man Industries is also holding discussions with Indian conglomerates looking to transition to green energy. 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 government has unveiled a$ 2 billion ( 160 billion) scheme to promote the production of green hydrogen in the country. Producers will receive incentives worth at least 10% of their costs to support the transition to renewable energy. The government plans to offer incentives of at least 30 a kg for green hydrogen production to cut manufacturing costs from the current 300 a 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 million 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 company expects revenue of around 40 billion in the next 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 raw material prices softening, it expects better realisations in Q3 as well. The company is also focusing on new product development to meet the evolving needs of its customers in the green hydrogen industry.

As the pioneer, it is likely to seek partnerships with other companies and research institutions to accelerate its green hydrogen business. Man Industries plans to expand existing capacities to meet the growing demand for green hydrogen. Having earned significant revenue from overseas, it plans to enter more markets.

The company is well positioned to take advantage of this shift, as it has a strong track record of execution and a large network. With a robust foundation and strategy, Man Industries is poised to play a pivotal role in shaping the future of sustainable energy on a global scale..