Royal Dutch Shell plc RDS.A recently acquired a stake of around 20% in India-based solar energy solutions provider, Orb Energy Pvt Ltd., through its New Energies division, which was created in 2016. The move is in line with Shell’s plan of providing electricity to 100 million people in developing countries by the year 2030.
Headquartered in Bengaluru, Orb Energy is a credit provider to small and medium-sized enterprises for investing in rooftop solar installations. The firm, which was founded in 2006, provides low-cost solar electricity. It has a production facility of solar water heating systems in India and a solar photovoltaic panel factory. It has sold more than 160,000 solar systems, which has a total production capacity of 75 megawatts in the growing South-Asian country. The firm also has operations in Kenya, East Africa.
Shell’s acquisition of a stake in Orb Energy is expected to enable the Dutch energy major to tap into the growing renewable market of India. Notably, last year, it had invested in another company in India that makes miniature power grids. Investments like these are expected to generate huge profit for Shell in the long run. Moreover, these enable the company to focus more on clean and renewable sources than hydrocarbons, with the latter's market currently under pressure due to low commodity prices.
Shell intends to work on eradicating energy poverty in developing nations through these moves, while focusing on proven business models and technologies. These models — which incorporate mini grids and decentralised energy systems — can be utilized on a large scale.
The integrated energy major have lost 2.8% year to date compared with 5% decline of the industry it belongs to.
Zacks Rank & Stocks to Consider
Currently, Shell has a Zacks Rank #5 (Strong Sell). Some better-ranked players in the energy space are Shell Midstream Partners, L.P. SHLX, TC PipeLines, LP TCP and NuStar Energy L.P. NS. While Shell Midstream sports a Zacks Rank #1 (Strong Buy), TC PipeLines and NuStar Energy have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shell Midstream’s 2019 earnings per share estimates have increased from $1.52 to $1.59 in the past 60-day period.
TC PipeLines beat earnings estimates thrice in the last four quarters, with an average positive surprise of 12.6%.
NuStar Energy’s third-quarter 2019 earnings per share are expected to gain more than 107% year over year.
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