GE Power India To Pursue Opportunities In Key Business Segment Despite Parent Exit

Shares of GE Power India Ltd. snapped a six-session losing streak after the company said it will continue to pursue opportunities in a business segment that focusses on reducing sulphur dioxide emissions even as its promoter plans to exit the new-build coal power market globally.

“The total flue-gas desulphurisation market (including captive power plant) in India is 225 GW, out of which about 82 GW (Rs 33,000 crore) has been already been ordered till date by majorly central public sector utilities with a few state utilities and IPP (independent power producer),” according to an exchange filing. GE Power India, it said, to date has been awarded 10 FGD projects, amounting to about 13 gigawatts (representing about 15% market share), which are now in various stages of execution.

The balance potential market for FGD in India, which remains to be ordered in the next three to five years, is estimated to be around 143 GW, the filing said. Of the balance, GE Power has the capability to pursue opportunities for around 66 GW, or nearly Rs 29,000 crore, independently, without any further support from its promoter.

The company intends to do so on the basis of its existing technology licence agreement for FGD with GE and its own execution capabilities, the filing said.

Reacting to the development, shares of GE Power ended 2% lower at Rs 200.9, after gaining as much as 8.8% to Rs 223 apiece. Shares fell for the seventh straight day.

On Sept. 21, General Electric, promoter of GE Power, said it intends to exit the new-build coal power market to focus on and invest in its core renewable energy and power generation business.

Since then, the stock has declined more than 55%. Nearly half of the fall came in the last six trading sessions, eroding Rs 1,264 crore of the company's market capitalisation.

ICICI Securities downgraded the stock to reduce and cut its price target to Rs 363 from Rs 604, citing a bleak outlook for the domestic coal power market, according to its note on Oct. 25. “With the exit of a parent like GE, local listed entities like GE Power India will find it tough unless an alternate arrangement is worked out, which allows the continuation of the status quo,” Renjith Sivaram and Vipin Goel, analysts at ICICI Securities, wrote in the note.

The current backlog for GE Power India as on June 30, 2020, is at Rs 7,498 crore, it said in a conference call on Oct. 23.

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