The summit’s outcome has left much to be desired as politicians from over 200 nations could only muster up a deal that just keeps the hope of limiting the rise in temperature of the planet to 1.5 degree Celsius above pre-industrial times alive.
That said, energy transition from fossil fuels towards greener, more environmentally-friendly sources is set to be the biggest investment theme of the current and next decade.
“With COP26 wrapped up in November, we expect 2022 will be a year of implementation rather than seeing new policies and targets,” said brokerage firm Morgan Stanley in a report.
In India, industrialists such as Mukesh Ambani of
and Gautam Adani of Adani Group have already announced plans for multi-billion dollar investments in green energy and to ensure that India moves closer towards its net-zero target for 2070.
According to Morgan Stanley, while the decarbonisation of energy systems accelerated in Asia this year, it does not expect new policy catalysts for the theme. The brokerage firm believes that investors should be cautious of direct climate change plays and instead focus on alternative environmental themes.
In that respect, the brokerage has enlisted five stocks ideas for 2022 for investors to play the sustainability trend:
GAIL India | Price target: Rs 202
Morgan Stanley believes GAIL India supports the theme of rising gas penetration in the country and government’s focus to expand gas as a key energy transition fuel.
Larsen & Toubro | Price target: Rs 2,216
The brokerage sees L&T as a bet on exploring opportunities on the decarbonisation and green hydrogen side. It said there is significant scope for L&T to increase its green portfolio, which contributed 31 per cent of its revenue in FY21.
Motherson Sumi | Price target: Rs 255
Morgan Stanley believes the leading auto components supplier’s wiring harness business will benefit from the industry’s product mix shifting towards hybrid cars and electric vehicles from internal combustion engines.
NTPC | Price target: Rs. 150
The brokerage believes that the state-owned company is transforming to become an integrated player in diversified sectors across renewable energy, energy storage, energy distribution and EV charging.
Reliance Industries | Price target: Rs 2,925
The brokerage is also betting on RIL’s impending transformation of its energy business to offer decarbonisation solutions including infrastructure in areas of hydrogen, integrated solar PV and grid batteries.
