LNPR Capital®
LNPR Capital®

@LnprCapital

22 Tweets 27 reads Jul 04, 2022
Eki Energy Services Analysis!!
#EkiEnergy
A detailed thread 🪡🧵
#StockMarket #Investing
About -
EKI Energy Services Ltd. is an Indian company founded in May 2011 provides climate change advisory & support to companies in the country & across the world. Its services include climate change advisory, carbon offsetting, business excellence advisory & training Svcs.
Global Presence -
EKI has been earning 52% from Europe, 27% from USA, 12% from India, 7% from Australia & 2% from rest of the world.
EKI is working with leading brands & leaders
across the world.
Company is constantly identifying projects within India & outside to reduce carbon
emissions, protect biodiversity & deliver measurable benefits aligned with the aims of the Kyoto
Protocol, Paris Agreement & the UN Sustainable Development Goals.
Financial Summary -
Q4 FY22 (YoY)
Revenue were at Rs.1800 Cr.⬆️844%
PAT at Rs.383 Cr.⬆️1951%
EBITDA at Rs.515 Cr.⬆️1937%
EPS at Rs.558 ⬆️ 1406%
Revenue Breakup -
EKI earns 99.5% of it's revenue form Climate Change & Sustainability Advisory and Carbon Offsetting
0.4% from Business Excellence Advisory & Training Services
0.1% from Electricity Safety Audits.
Clients -
EKI has strong standing relationships with most of it's customers, their customers includes GAIL, Adani, ReNew power, NTPC and many others.
They also provide services to international customers like The World Bank, Siemens, etc.
Industry Oppertunity -
✅ 137 countries have
committed to work toward
net zero emissions by 2050
& to enhance their
international climate pledges under the Paris
Agreement.
✅ Companies are increasingly
using internal carbon pricing
to reduce emissions.
✅ Stringent regulations & implementation of carbon
pricing (emissions trading systems (ETS) & carbon
taxes) around the World are
expected to drive demand
for carbon credits in the
near term.
✅ Corporates all around the
World are aiming for carbon
neutrality.
Industry Outlook -
India is the world’s 3rd largest GHG emitter & 2nd most populous country. Farming sustains half of India’s 1.4 bill population but is also a major contributor of GHG. The Govt is pushing for a uniform carbon trading market through policy changes & legislation.
The proposed legislation is aimed at creating a robust domestic market for clean certificates. India is also well placed to pioneer agriculture-related carbon credit trading.
India's International climate commitments include a reduction goal in GHG emission intensity of GDP by 33-35% until 2030 & target to increase the
share of non-fossil fuel energy sources to 40% by
2030. India is pledged to achieve net zero carbon
emissions by 2070.
The Global carbon credit market was valued at US$ 211.5 Bn in 2019 and is expected to reach US$ 2,407.8 Bn by 2027 at a CAGR of 30.7% between 2020 and 2027.
Business Expansion Strategies -
✅ With the acquisition of new talent pool & development of existing
human capital, Co is aiming to enter into new geographies across
the Globe where it see huge potential for climate & acquisition of carbon credits projects.
✅ EKI will further strengthen the backward integration of the carbon credit
supply chain through environment friendly projects that also enable
community upliftment i.e., cookstove, biogas, tree plantation, etc.
✅ Company intends to continue to expand its end-user client base in the
developed countries such as Germany, U.S.A, Australia etc. Its strategy to
supply carbon offsets directly to the end-users will result in higher profit
margins.
Joint Venture -
EKI Energy Services & Shell Overseas Investments B.V. floated a JV company for nature-based solutions in India to reduce GHG emissions.
They will work on conserving,enhancing & restoring natural ecosystems such as forests, agriculture, grasslands, blue carb, etc
Risks -
🛑 Carbon pricing is dependent on the supply & demand of carbon credits majorly from developing nations
to developed nations. Any increase in the supply of carbon credits in these developing markets would
reduce the carbon credit rates as well as our operating margins.
🛑 EKI has not entered into any long-term contracts with its customers & they typically operate on
the basis of orders. Inability to maintain regular order flow would adversely impact revenues & profitability.
🛑 Fluctuation in foreign currency exchange rates could affect financial condition & results of
operations.
Conclusion -
With +13 yrs of advisory experience,well established network of 1000+ greenhouse gas efficient projects.
The Co is constantly looking for new growth avenues including acquisitions/partnerships to play a bigger role in global carbon asset management.
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