Sembcorp unit bags new solar power project in India

SEMBCORP Industries' India energy arm Sembcorp Energy India Limited (SEIL) has clinched a 400 megawatt (MW) solar power project through its renewables subsidiary, Sembcorp Green Infra.

The energy and utilities group announced on Friday that SEIL won the bid in a "closely-contested" auction conducted by the Solar Energy Corporation of India (SECI).

Under the letter of award from SECI, SEIL will develop the project in the northern Indian region of Rajasthan. It is to be connected to the state's transmission utility, Rajasthan Rajya Vidyut Prasaran Nigam Limited.

The project's entire output will be sold to SECI under a 25-year long-term power purchase agreement. It is expected to be ready for commercial operation by mid-2022 and will be funded through a mixture of internal funds and debt, said Sembcorp Industries in its pre-market filing.

Sembcorp Industries' latest project win brings the group's renewables portfolio to over 3,000 MW in operation and under development across Singapore, China and India.

According to group president and chief executive Wong Kim Yin, it represents another step towards transforming Sembcorp Industries' portfolio.

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"Sembcorp has an established track record in delivering world-class power projects. This is backed by our strong capabilities in development, execution and operations. India is a key market and we will continue to provide sustainable solutions to contribute to the nation's clean energy mission," he said.

SEIL had previously completed the commissioning of 800 MW of wind projects awarded from three earlier SECI bids. This makes SEIL the first independent power producer to do so, said the group.

Commenting on Sembcorp Industries' latest project win, Lim & Tan Securities said while benefits will accrue in the longer term, it likes the group's renewed focus on the renewable sector, which is viewed to be in line with the new US administration's goals under a Joe Biden presidency. 

The brokerage however remained "neutral" on the stock given its current valuation metrics. 

"At 30 times price-to-earnings, 1.7 per cent dividend yield and only 4 per cent upside to consensus target price of S$1.84, we are 'neutral' on Sembcorp Industries," stated Lim & Tan in its research note on Friday. 

As at 11.02am, shares in Sembcorp Industries were up by 0.6 per cent or S$0.01 at S$1.78.