Is Sembcorp Industries' Indian IPO ready for takeoff?

Their acquisitions in 2017 raised speculations on their listing in India.

Sembcorp Industries (SCI) had an eventful year due to its Indian segment, so OCBC Investment Research said it is not surprising if it undertakes an initial public offering (IPO).

An October report by India’s LiveMint mentioned that SCI is preparing to list its Indian unit, which consists of thermal and renewable power assets. However, the greater focus will still be on the results of the strategic review, which should be known by the end of this year.

This year, SCI increased its stake in its India renewable energy business to 70.38%, won an Indian wind power project with up to 250MW capacity, and bagged master development rights to the Andhra Pradesh Amaravati City start-up area.

SCI also announced that it will increase its stake in its Indian renewable energy business to 100%. Its bid for India’s second wind power auction also won.

OCBC Investment Research said there has also been speculation of a potential privatisation or divestment of Sembcorp Marine and possible divestments of non-core assets and utilities assets in more mature markets to invest in marine or other emerging market utilities assets.

Another possible investment that has been speculated on is the liquefied natural gas (LNG) business in Singapore, with its future prospects, given its relevant expertise and established track record.

"Ever since our downgrade to Hold on 3 November, SCI’s share price has corrected 10% compared to the STI’s flattish performance," OCBC analyst Low Pei Han said.

OCBC upgraded their rating to BUY with a fair value estimate of $3.59.

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