Sembcorp's profits to grow with new wind project in India

The project’s high-wind location would boost yields by up to $4m.

Sembcorp Industries’ plans to expand its wind power in India is expected to boost its profits by as much as $4m, said a company flash note by CIMB.

To recall, Sembcorp's wind division in India, Sembcorp Green Infra (SGI), was awarded to build a project with close to 250MW capacity. The project will be located in Tamil Nadu and connected to India’s Central Transmission Utility. The power will be sold to Power Trading Corporation under a 25-year long-term PPA.

According to CIMB, the project will cost around $405m, and will be developed in phases and fully commissioned between September 2018 and March 2019, in time for the high wind season following 2Q17. The project will be funded by project financing.

The brokerage firm said the project will add around $3m-4m of net profit to SGI. Basing on 788MW operating capacity, CIMB noted how SGI delivered $13m of net profit in FY16. This is forecast to grow to $19m by end-2017 with 970MW operating capacity.

"SCI is working closely with the equipment supplier to maximise utilisation of the assets. The key to ensuring higher returns is for the project to be stationed at high-wind areas. Wind power is dominant in Tamil Nadu, with above 30% share in overall wind capacity installed in India," noted CIMB.