In recent years, the renewable energy sector has been the subject of intense interest and investment from around the world. From governments to private investors, there has been a surge in capital flowing into the renewable sector. However, as with any industry, there are always challenges and opportunities that must be navigated.
Murtuza Arsiwalla, Director at Kotak Institutional Equities, recently spoke to CNBC-TV18 about his outlook for the renewable energy sector in India. According to Arsiwalla, there is likely to be more capital expenditure (capex) for the transmission segment in the renewable sector.
As the renewable energy sector continues to grow, the demand for transmission infrastructure is also likely to increase.
Despite the anticipated increase in capex for the transmission segment, Arsiwalla sees healthy growth in the renewable sector with limited competition. This is good news for investors who are looking for attractive returns from the sector.
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Furthermore, Arsiwalla believes that even if all of India's renewable targets are not met, the Power Grid is still in a "sweet spot".
Arsiwalla is also constructive on NTPC, one of India's largest power generation companies, as it makes a big transition to the renewable space. The company is actively investing in renewable energy projects and is poised to benefit from the growth in the sector.
“Our only concern so far on the renewable space has been that the competitive intensity is far more and the return profiles that we have seen are not as attractive as what we are seeing on the transmission side,” he said.
However, Arsiwalla does caution that the renewable generation space is becoming more competitive, and return profiles may not be as attractive as they once were. This is an important consideration for investors who are looking to allocate capital to the sector.
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