Friday, December 11, 2009

New HOT Sector............Carbon Credit.......

Carbon credits offer us a Rs 28,000-cr opportunity

LESLIE D’MONTE New Delhi, 10 December
The Indian government has approved more than 1,400 projects as part of the Clean Development Mechanism (CDM) that could attract around $6 billion(Rs 28,000 crore) into the country by 2012 through sale of Certified Emission Reduction (CER) certificates, according to Environment and Forests minister Jairam Ramesh.

The National CDM Authority (NCDMA) in India has accorded Host Country Approval to 1,455 projects. These projects have seen an investment of more than $33.7 billion(Rs 1.6 lakh crore). If all these projects get registered at the CDM executive board, it will earn developers over 600 million CERs by 2012. At aconservative price of $10 per CER, the figure works out to a little over $6 billion.

“This is the potential foreign direct investment (FDI) that India stands to earn from carbon credits. In fact, 10 per cent of India’s annual greenhouse gas (GHG) emissions can be neutralised because of this,” Ramesh told Business Standard ,adding: “India may be the second-largest country in terms of the number of CDM projects (after China) but is the best in terms of implementing them.” Carbon-efficient projects in India, China, and other developing nations, however, are facing uncertainty over the new compliance rules post 2012 since the Copenhagen Agreement is expected to establish a new sectoral carbon market-crediting mechanism with focus on the Clean Development Mechanism (CDM) in less developed countries (LDCs).

In fact, despite the promise that carbon credits hold, the number of Indian carbon offset projects proposals submitted every day to India’s national authority — that is, CDM India — has reduced approximately by 30 per cent, according to Mayank Batra, Research Analyst (Environment and Building Technologies), South Asia & Middle East, Frost & Sullivan.

Carbon credits are a key component of national and international attempts to mitigate the growth in concentrations of GHGs. One Carbon Credit is equal to a tonne of carbon. Carbon trading is an application of an emissions trading approach. There are two broad methods of earning carbon credits. Carbon Offset Credits, which consist of clean forms of energy production, wind, solar, hydro and biofuels. And Carbon Reduction Credits which comprise the collection and storage of carbon from the atmosphere through biosequestration (reforestation, forestation), ocean and soil collection and storage efforts.

“Project-financing activity has also declined, as people are looking at Copenhagen for future developments and buyers are not willing to enter into deals that have post-2012 delivery,” says Batra.

Asia is the leading supplier of CERs in the global carbon market, holding approximately 77 per cent of the share. Over 3,714 projects are developed under CDM all over Asia. Most of these are the future-installed power projects, which will have a capacity of around 58 Gw in hydro, wind, biomass, geothermal, biogas, landfill gas, solar, tidal, energy efficiency-based own generation, and coal bed/coal mine methane sectors.

India, on its part, has generated around 30 million carbon credits, and approximately 140 million are in pipeline. Around 225 Indian projects in the fields of biomass, cogeneration, hydropower, and wind power with a potential of 225 million CERs have been registered. Carbon offsets from solid waste projects, too, will see a rise. At present, the Indian solid waste management market is witnessing tremendous growth. Currently it is valued at around $155.56 million (Rs 728 crore) and is expected to grow at a rate of around 20 to 25 per cent in the next three to five years.

My Comments:

With China already annoucing the Carbon emmision cut and Obama emphasizing on clean environment ,clean energy sector will have a run and there is where Solar sector play will also come.....

I have been writing on Carbon Credit since long.I have been bullish on this sector since 2-3 yrs as if one will go by my posting at MMB and at other places then they can see that Navin Flourine was recomended way back in 2006-2007.

Now when the sector is coming to the fore, carbon credit stories will start coming up.One other share which I have recomended is Sahyadri Ind and that was also way back in 2007.Sahyadri is also gaining from CC.

There were some other stocks which I have written here but not discussed in detail like Alufluoride Ltd,IFB Agro,Tanfac etc......these are all stocks where CC story is coming up.Torrent Power which was recomended below 100 and is now over 300 means return of over 300% within a year is also gaining from CC.

I remember I gave a call on Kalyani Forge around 80 and it has almost doubled.In the same post I recomended Tinplate and it gave a right @ 45 and it is now XR and price is 62.The recomended price was around 45.

Saw yesterday that PAE, APW President,LT Foods etc were in 20% upper circuit.Ennore Coke is moving nicely and looks still promising.

There are laggards as well, like PSL,Apar,Srie Infra,etc but they will run when their time will come.

Happy to note that KPIT Cummins is in for run and so is Venus Remedies.

Heidleberg Cement,Prism Cement are 2 cements stocks which I have recomended and needs to be keep watch on.One can buy in small quantity and buy more on dips.

Kale Consultancy is looking good still and one can still take exposer here.I once recomended Indsil Hydro as well some couple of months back and is looking promising as well.

When my picks runs and people makes money I feel very happy that someone is earning from my picks.I hope readers must be benifitting from my picks .....I have tried my level best to write here with all the constrainst I have .Believe me it takes lots of my time to go through all these and coming out with a stock to recomend.Filtering all that needs to taken in account and ignoring what needs to be is a very big task.

Read my replies can get something out of it always......

When readers read a recomendation here it is the precipitation of all my hard work ....that comes after so much of due diligence on my end and some times I may err .After all I am a humanbeing ...


  1. sir,
    i am new to ur blog.what is MMB

  2. ramurthy,
    MMB is moneycontrol message board where I use to write as 'nakul'..u can still find me there but I do not post there now.....

  3. Rajeev,
    I have a watch on most of the stocks that you have recommenced. If we have to list the shares that had moved up one post wont be enough. Almost all have moved up.
    I am happy when your recommendation moves up and happier when it comes down so that I can buy them at cheaper rate.

    I really appreciate the effort you are putting. As I have told you before, you have no idea how much help you are doing to people like me.

    Also, thanks to all others who keep adding your valuable comments.

    Thanks once again!!!

  4. Rajeev,
    I found a similar gr8 idea here

  5. This comment has been removed by the author.

  6. Hi Rajeev,

    I want to have your views on Apar Industries. As you know it is in speciality oil and conductor business. Where it has competition from Savita Oil Technologies and Sterlite Technologies respectively. Both are performing exceedingly well, but apar is still in accumulation since the floating stock is very low and most of it already absorbed by big HNI's and FI's. Operator is taking much longer to give a breakout in it. Due to this sluggish pattern I still feel this to be a screaming value buy. Am I correct in my thinking. Do correct me if I am wrong with your inputs on this.



  7. Amit,
    Apar Ind is a screaming buy.....yes....

  8. Hi Rajeev,

    Please comment on TCPL and Time Technoplast.

    They look good to me. Your comments would strengthen my view.

    Yogesh Tiwari

  9. Yogi,
    Yes both are looking good.Actually Timetechno I recomended at mmb.

  10. Raj Oils.

    Operating CashFlow positive for last 5 years

    Debt to equity ratio(No splits yet) has gone down in past 5 years

    Looks cheap right now as compared to peers.

    Please comment.

    Yogesh Tiwari

  11. Hi rajiv, i am new to your blog. I am seeing for the past few week your recommendation u take a lot of effort to take detail abt company upcoming project . Dont mistake me , but if i look at company financial ratio none of them look cheap. Is it a coincidince that the price are inc. Bcos of good market sentiment only.

  12. sir,

    Iaw following your blog for quite
    some, i have been greatly benfit
    by you stock advice, good job
    keep it up

  13. One more article , Time of India Carbon credit prices looking up again
    11 August 2009, 02:05am MUMBAI:

    Optimism seems to have returned to the carbon credits market, with spot prices of certified emission reductions (CERs) or carbon credits
    testing the euro 13-levels. The December 2009 contracts for CERs on the European Climate Exchange are trading at around euro 12-12.5 over last month. The gap between forward contracts and spot prices has shrunk, which means spot prices are also ruling around the same level.

    ‘‘Companies want to sell their issued CERs, but are waiting for the price to stabilise at euro 13,'' said Vishal Kedia, head-carbon credits, Enam Holdings. CER prices began sliding in October 2008 from a peak of euro 20 to a low of euro 8-10 early this year.

    The drop in price occurred due to a contraction in demand for CERs as a result of lower emissions on account of the global economic slowdown. However, even when CER prices were ruling low, the industry witnessed a wave of sell-offs in early February 2009. Companies were in need of cash then. This factor continues to play a role in determining whether markets get pulled down by sell-offs or get built up, with companies waiting for better realisation, resulting in a pent up demand.

    Sellers have been sitting on inventory waiting for price appreciation, even as fewer clean development mechanism (CDM) projects out of India are getting registered at the United Nations Framework Convention on Climate Change (UNFCCC).

    At present, trading volumes are low due to summer holidays in Europe. Over the next couple of months, prices are expected to be volatile, in the region of euro 11-13. ‘‘I feel companies are still adopting a wait-and-watch policy till a clearer direction emerges on the market,'' said Suresh Iyer, deputy GM, JSW Steel.

    Buyers are likely to assess their emissions and offset requirements for the year by the end of September 2009. Another important factor affecting CER prices is the low rate of registration and issuance, which could curb supply and, in turn, increase prices. By and large, carbon markets would get a direction by November-December 2009, after a clearer picture emerges on the likely decision by the US Senate on the climate bill, on whether there is a global consensus on an international agreement in Copenhagen, and the intensity of winter.

    ‘‘If the above decisions are positive, prices may rise. Implications of this over the 2010-11 period would be a price increase to around euro 15-16 levels,'' said Iyer.

  14. Rajeev
    how about Nakoda Textile Industries Ltd is The EPS for FY10 will be close to Rs14/- giving P/E of 6-7 holding EGM on Jan 04, 2010 for obtaining approval of the shareholders for sub-division of the equity shares Rs 10 to 5 and issue of bonus shares 1:1 of the Company.

  15. Dear Rajeev
    jsw steel expect 7.67 lakh CER credits annually from its operation of a 100 MW power project for generation of electricity by combusion of waste gases from blast furnace and corex units (cost effiicent and environment frindly prouduction of steel and coal)
    my point whether this carbon credit revenue will be accounted in JSW energy in future or continued with JSW steel, can you please clarifty.

  16. nirash,
    I am not an analyst nor a researcher.
    I do not know how to read BS or AR.
    So when u ask me to look at these things it is hard for me to understand and interpret it.

  17. Nakoda Tex can do good as Textile sector is in favour

  18. raj,
    yes ,market sentiments plays important role in moving the stock up.I understand that u mean to say that my calls are moving more because of market sentiment then on fundamentals.
    I have no clarification on that....I think you are right...

  19. Rajeevji, I think the best answer and the example to give Raj should be for Kwality Dairy. If some one would have waited for the fundamentals or the technicals to come in between then should have never turned their fortune, and kwality is not just the one, Infosys promoters share holding is 16% so where is the confidence of the promoters in Infosys. Rajeevji sorry but using your phrase but in a different way as I really understood it in a very short term, in market "IMPOSSIBLE IS NOTHING".

  20. sir am dhiraj golatkar from goa
    first of all i am always reading your blog for last one week and found that this is the best place for investement advice
    am thankful for u for doing such a wonderful and helping work .
    i am not a great analyst but have been studying stock market in recent time
    sir can you comment of nila infrastructure and gremach infra for long term say 10 years
    i want to invest around 25k in each stock for good returns
    hoping that u will will help me.
    i am looking out for systems for intraday trading and some are working well.
    one of my post u can check on tradeji on the following link
    hpoing for an reply from u
    dhiraj golatkar

  21. I actually enjoyed reading through this posting.Many thanks.

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