Goodbye India coal plant, hello upsides to Sembcorp after SEIL sale: analyst
The sale will speed up Sembcorp Industries’ decarbonisation targets.
An analyst increased its target price for Sembcorp Industries to $4.78 after the latter sold 100% of its stakes in Sembcorp Energy India Limited (SEIL) to Oman pension-backed Tanweer Infrastructure.
CGS-CIMB, in a report, said the rise in target price stems from Sembcorp Industries’ sale of coal-powered SEIL to accelerate its decarbonisation targets, which is a benchmark in sustainability initiatives.
Sembcorp sold the India firm, which is operating two coal plants totalling 2.6 gigawatts, for over $2.1b. Despite turning over the India energy firm to its “trusted partner,” Sembcorp vowed to support eco-friendly initiatives of SEIL.
“SCI has outperformed the [Straits Times Index] by c.70% year-to-date but we think there is further upside to be reaped given its decarbonisation plans,” said CGS-CIMB.
CGS-CIMB also sees that the divestment of SEIL will not be a “major dent” in Sembcorp Industries’ profits.