Pollution and stock investment? You may be wondering we are talking chalk and cheese. But not really. A cleaner ecosystem never looked so alluring fr om stock perspective. And India’s high pollution levels mean there is a huge opportunity waiting for investors to tap into.
The fight against pollution — be it land, water or air — is going up by many notches. That’s good news for those companies that manufacture products to contain the adverse impact of pollution.
The bottomline is this will not just bolster the company’s balance sheet, but give investors on Dalal Street a few stock choices to play with looking for better returns.
Alarming air quality underscores the importance of quality products that can lead to healthy living. These can be masks, air purifiers and superior auto components for electric vehicles, to name a few.
The problem at hand is looking scary. A latest KPMG report showed that four Indian cities are among the world’s 10 most polluted cities. If we look at top 20, then 10 belong to India.
The country has also recorded second highest premature deaths due to air pollution in the world, according to State of Global Air 2017 report.
Bad air is only tip of an iceberg. Solid waste management turns out to be another big headache. The mountain of trash in Delhi and its nearby areas is a classic example.
Improper management of trash poses a big threat to life too. The wounds of last year’s garbage crash at East Delhi’s Ghazipur landfill and its human toll are still fresh.
For equity investors, this might be the time to take stock and consider a few options from this space that can deliver robust returns. A couple of companies dealing in eco-friendly products have also started receiving solid orders.
Hyderabad-based company Goldstone Infratech is a case in point. It has reportedly beaten major producers in terms of securing orders for electric buses in the country. Buoyed by the recent success, Goldstone Infratech plans to step up its presence across India by tapping both government and private customers in the next five years. The stock has soared over 500 per cent since January last year.
For the December quarter, Goldstone Infratech posted a net profit of Rs 6.67 crore, up 117 per cent, as against Rs 3.04 crore in the previous year.
SPML Infra, with expertise in municipal solid waste management, effluent water treatment plants, and waste water management, has rallied nearly 100 per cent on bourses since January 2017.
G Chokkalingam, founder, Equinomics Research and Advisory, sees select engineering companies dealing with controlling pollution to benefit.
According to the World Bank said, individual country studies suggested that outdoor and household air pollution, lead exposure, noise issues and inadequate water supply, sanitation and hygiene are the focal points.
Electric vehicles are the upcoming trend. The paradigm shift will undoubtedly increase demand for auto ancillaries in coming years. In fact, the automobile industry will have to line up Rs 1 lakh crore of investment to make the switch from BS IV to BS VI fuel standards, an estimate from industry body Society of Indian Automobile Manufacturers (SIAM) showed.
Sanjeev Jain, AVP, Ashika Stock Broking, said, “Companies engaged in the business of auto ancillaries such as Motherson Sumi will benefit from the shift to electric vehicles. Water treatment firms and select sanitaryware players will benefit from the government’s objective to reduce pollution in the country.”
Companies like Thermax, Voltas, VA Tech Wabag and Ion Exchange (India) are some of the listed companies linked directly or indirectly with water treatment activities in India. They are involved primarily in providing safe drinking water, handling water waste, industrial and municipal, and sewage and effluent water treatment.
Voltas jumped over 55 per cent to Rs 647.45 on April 17 from Rs 408.15 on April 17 last year. ION Exchange and Thermax rose 11 per cent and 12 per cent, respectively, during the same period. However, share price of VA Tech Wabag has dropped over 20 per cent over the last 12 months.
Government initiatives like Smart City, Yamuna clean-up and a host of similar initiatives are only expected to provide more momentum to such players.
Source: Economic Times