SYNERGY GREEN INDUSTRIES LIMITED
Synergy Green Industries Ltd is a state of the art world class foundry situated at Kolhapur. The company is India’s largest automated fast loop molding line for large castings, especially catering to the requirements of wind turbine manufacturing. It is part of the flagship Shirgaokar Group whose major business activities include, Sugar, Foundry products, and heavy engineering products. Annual turnover of the group is Rs. 3000 Crore. Synergy primarily manufactures iron castings for wind turbines.
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Major Domains of Operations
The main products under Wind Energy is manufacturing of Wind and Gear box castings. Non wind products include castings for Mining, Pumps and Plastic injection. The Company mainly caters to the domestic & overseas OEM buyers in Wind segment such as Vestas Wind Technology India Pvt. Ltd., GE India Industrial Pvt. Ltd, Siemens Gamesa Renewable Power Pvt. Ltd., Senvion Wind Technology Pvt Ltd and contributes around 70% of revenues. Company also serves to Top wind gear box manufacturers like ZF Wind & Flender Drives and contributes 15% of revenues. Balance of the 15% revenue is coming from non-Wind customers like Terex India Pvt. Ltd., Ferromatic Milacron, and Pump Industry customers. The present installed capacity is 30000 TPA which is expected to go up to 45000 TPA in near future.
Currently, the company caters to marque customers for wind energy like Vestas, Siemens Gamesa, GE, Senvion, Nordex, Adani, Leitwind. Gear Box customers include ZF and Siemens. Mining customers include Terex Pegson, Terex Trucks. Pump customers include Xylem, Wilo, Jyoti Ltd, Kirloskar. Plastic Injection customer includes Ferromatik Milacron. As per the company’s estimate, considering the present order book and potential opportunities, revenue growth during next two years is estimated to be at 25%. With stable input prices and sustained revenue growth, company is expecting to achieve 12% plus PBDIT margins.
Indian wind industry overview
India eyes global wind energy supply chain opportunities as it targets growth in capacity additions. India has prioritized renewable energy, including wind power, in its long-term vision for transformation of wind sector that experienced a slowdown in capacity additions in the recent past.
India’s Central Electricity Authority (CEA) projects electricity demand to grow 75% by 2031-32 from 2021-22 levels, and 170% by 2041–42. Demand is projected to increase by more than 90% in four out of the eight windiest states by the start of the next decade. The World Energy Outlook 2022 estimates demand to triple between 2021 and 2050.
Renewable energy (excluding large hydro) already represents nearly 30% of India’s installed power generation capacity, at 410 GW, with 10% of this capacity being wind energy. The combined impact of economic growth, net-zero goals and burgeoning electricity demand will result in a rapid increase in the share of renewable energy in the power generation mix. For wind power, India’s target is to achieve a cumulative 140 GW of capacity by 2030.
In 2022, India awarded 2.25 GW of standalone and 2.45 GW of hybrid wind capacity through auctions. It commissioned a total of 1.8 GW of onshore wind power capacity. Recent policy reforms are likely to further boost demand for wind power and accelerate capacity additions over the coming years.
The Ministry of New and Renewable Energy (MNRE) has outlined a wind-specific renewable purchase obligation (RPO) trajectory upto 2030, with an annual target of an 8 GW onshore wind tender every year between 2023 and 2030 based on a single-stage two-envelope bid system.
The plan is to harness the massive wind energy potential of eight windy states. Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu and Telangana. To support the development of power evacuation and transmission infrastructure, the Central Electricity Authority (CEA) has published its transmission planning report for the integration of renewable energy, including 58 GW of wind energy – of which 10 GW is offshore Tamil Nadu and Gujarat – to the Inter-State- Transmission-System (ISTS) by 2030.
ICICI research report estimate market growth at 35% CAGR. On the back of various policy actions, industrial demand and more round-the-clock contracts, wind industry is set to turn the corner and wind installations are projected at 3.5GW and 4.5GW for FY24E/FY25E (vs 2.2GW in FY23).
Key Financial Highlights- H1 FY24
– Revenue from operations for H1FY24 stood at ₹ 156.26 crore against 136.91 crore last year, up 14.13 % (YoY).
– PBT for H1FY24 at ₹ 8.01 crore against (-)3.18 crore last year (YoY).
– PAT for H1FY24 stood at ₹ 5.79 crore against (-)1.90 crore last year (YoY).
– EPS for H1FY24 is ₹ 4.03 per share against (-1.30) last year of a face value of ₹ 10 each.
Major Risk Factors
-Raw material costs going up can impact margins.
-Competition risk: This refers to the potential impact of increasing competitive pressures on the Company’s ability to achieve expected margins and market share.
-Currency volatility risk: Currency volatility creates transaction and translation risks, especially if the Indian rupee appreciates against any major currency. This could impact reported revenue, profitability and collection losses.
– Higher debt may lead to higher interest burden.
Sector: Industrials
Market Price: Rs. 343.05 as on today
FV: ₹10/-
Stock Name: Synergy Green Industries Ltd
BSE Code: 541929 , NSE Code: SGIL
Market Cap.: Rs 481 Cr
Book Value: 24.85
Segment: Castings & Forgings
Incorporation: 2010
Headquarters: Maharashtra
