Home / Markets / Mark To Market /  Super 15: Stocks benefitting from rising popularity of ESG theme
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In a post-Covid world, conscious investing has gained lot of traction among investors. In fact, in 2021, at a global platform, India made a commitment to reach net carbon zero by 2070. With the environment, social and governance (ESG) theme fast catching-up, analysts at Jefferies India Pvt. Ltd have outlined key considerations for investors and picked stocks from five sectors to bet on this theme. They are as follows:

1) Coal Sector: The fundamental question for India's transition is linked to its coal sector. Ensuring a well-planned and just transition away from coal will be a significant challenge, with both risks and opportunities in the power sector and beyond.

With around 8% of state revenue from coal activities, diversification of the economy is needed.

Coal India Ltd will be central to the transition. The company has already taken steps to diversify into renewable power, with three gigawatts of planned solar capacity to FY24. Natural gas is also set to play a significant role in displacing coal.

GAIL India Ltd operates around 220 mmsmd (million metric standard cubic meter per day) of pipeline capacity and is the largest LNG trader in India.

2) Agriculture accounts for around 20% of India's greenhouse gas emissions and is the main source of non-carbon dioxide related emissions. Opportunities exist for investors through chemical free farming and low-cost solutions which improve irrigation and energy efficiency.

UPL Ltd will likely play a central role in decarbonisation efforts. Through various projects, it is driving the adoption of digital solutions and increased penetration of bio-solutions.

3) Road Transport: With auto demand set to grow to 2040, an uptake in electric power-trains is an important area of focus for policy-makers.

Tata Motors Ltd leads the local market with nearly 7% market share. Bajaj Auto Ltd, TVS Motor Company Ltd & Hero MotoCorp Ltd are actively expanding their electric vehicles portfolios.

4) Power Utilities: State-run distribution companies will underpin India's energy transition. Their financial fragility however currently inhibits their appetite for investment and transformation of the power grid.

NTPC Ltd should be a key beneficiary of new renewable capacity given its access to low cost funding. Power Grid Corporation of India, Larsen & Toubro Ltd, Siemens Ltd and KEI International Ltd could all see tailwinds from increased transmission and distribution spend.

5) Heavy Industry: Heavy industry's share of energy consumption has increased to 42%, making it the largest end user of energy. Incumbents are focused on renewable power with Shree Cement Ltd, The Ramco Cements Ltd and Ultratech Cement Ltd all active in this regard.

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