Nuclear Energy Stocks Retail Investors Are Watching For Data Center Power Demand

Global bond markets are reacting to persistent inflation risks and energy price concerns, with US 10 year yields holding near elevated levels. That kind of rate backdrop keeps reliable power supply and energy security firmly on investors’ radar. Nuclear energy stocks sit right at that intersection. This article looks at three stocks from our Nuclear Energy Stocks screener that aim to combine long term power demand with listed market access.

The three nuclear energy stocks highlighted below are just a starting sample. The full screen surfaced 19 more companies with equally compelling narratives that are not covered in this article.

To identify and analyze your own highest conviction ideas in nuclear energy, head straight into the Nuclear Energy Stocks screener.

Kirloskar Oil Engines (NSEI:KIRLOSENG)

Overview: Kirloskar Oil Engines is a Pune based manufacturer of diesel engines, gensets, pumps and related equipment that supplies backup and mission critical power solutions to sectors such as infrastructure, real estate, telecom, data centers, agriculture and defense in India and overseas. The company also supports its equipment with spares, fluids, aftermarket services and a small financial services arm.

Operations: Kirloskar Oil Engines generates most of its revenue from its B2B segment at about ₹58,979 million, with smaller contributions from B2C at about ₹11,478 million and Financial Services at about ₹8,932 million.

Market Cap: ₹305.3 billion

Investors watching nuclear and backup power should pay attention to Kirloskar Oil Engines because it sits at the intersection of unreliable grid supply, rising infrastructure and data center build out, and the need for dependable distributed energy. A recent 192 MW data center order from HyperNext highlights how its higher horsepower gensets can plug into long term digital power demand, while export growth and a growing service business aim to support recurring cash flows. At the same time, heavy reliance on diesel technology, earnings pressure in parts of the business and funding risk from borrowings mean this is not a simple growth story. The balance of these drivers and risks is what makes Kirloskar Oil Engines worth a closer look.

Kirloskar Oil Engines is positioned at the intersection of data center demand, grid reliability concerns and distributed power. To understand how that story fits together, go through the 3 key rewards and 3 important warning signs (1 is major!)

Build your own distributed power shortlist

Kirloskar Oil Engines and the other two nuclear focused stocks in this article all surfaced from a single Simply Wall St screen, but the real opportunity is in tailoring the filters yourself. Use our flexible Screener to combine valuation, growth, quality and risk checks, or start with one of our curated Investing Ideas.

Larsen & Toubro (BSE:500510)

Overview: Larsen & Toubro is an India based engineering and construction group that delivers large infrastructure, energy, hi tech manufacturing and services projects, from metros and factories to offshore platforms, refineries, nuclear equipment and data centers, for clients in India and overseas.

Operations: Larsen & Toubro generates most of its revenue from Infrastructure & Utilities at about ₹1,348.6b and Energy, Conventional at about ₹566.8b, with additional contributions from Technology, Platforms & Services at about ₹565.6b, Manufacturing & Products at about ₹148.6b, Financial Services at about ₹189.2b and Development Projects at about ₹49.7b.

Market Cap: ₹5,589.0b

Investors focused on nuclear and wider energy infrastructure may want to look closely at Larsen & Toubro because it sits at the center of several long term build out themes, from offshore wind and hydrocarbons to nuclear equipment and green hydrogen. A record order book around ₹6.13 trillion and recent contract wins with ADNOC, ONGC and TenneT point to multi year project visibility, while higher margin tech and digital services are becoming a larger part of the mix. At the same time, heavy exposure to government and Middle East projects, tight labor conditions and pressure on project margins keep execution risk significant. With earnings growth, a high quality earnings profile and an elevated P/E, the key question is whether you think L&T’s order pipeline and capital discipline justify paying a premium for that profile.

Larsen & Toubro’s record order book and premium P/E suggest investors see more ahead, but the real question is how that growth profile stacks up against its risk mix in the 2 key rewards and 1 important warning sign

Bharat Heavy Electricals (BSE:500103)

Overview: Bharat Heavy Electricals is a New Delhi based manufacturer and engineering contractor that supplies power plant equipment and turnkey projects for coal, gas, hydro and nuclear plants, as well as systems for rail, transmission, defence, aerospace, renewables, oil and gas, e mobility and energy storage in India and overseas.

Operations: Bharat Heavy Electricals generates most of its revenue from its Power segment at about ₹274.3b, with a smaller contribution from the Industry segment at about ₹85.7b.

Market Cap: ₹1,469.8b

Investors looking at nuclear and wider power infrastructure may find Bharat Heavy Electricals interesting because it combines recent earnings momentum with exposure to some of India’s energy build out themes. Recent earnings changes have been very large over the past year and analyst estimates point to continued double digit percentage changes in both earnings and revenue, supported by new orders from projects such as the Meja supercritical plant, Dangote’s gas turbines and green hydrogen work with thyssenkrupp nucera. At the same time, a rich P/E, low board independence, reliance on external borrowing and an uneven dividend record mean the situation involves risk. The key consideration is whether the current project pipeline and earnings profile justify accepting those governance and funding concerns.

Earnings momentum at Bharat Heavy Electricals is getting attention, yet the real story could be how its project pipeline and governance trade off. Go through the 2 key rewards and 1 important warning sign

Seeking Fresh Alternatives Beyond Nuclear?

Markets move fast and today's under the radar opportunities can become tomorrow's crowded trades. Scan fresh breakout potential while it matters, before momentum gets fully caught. Get in early.

• Spot companies with strong cash generation and supportive balance sheets by running the 252 high quality undervalued stocks. Do this before valuations respond and entry points start dropping.
• Track where capital and computing momentum are flying by scanning the 56 AI infrastructure stocks. Use it while these enablers of AI demand sit under the radar for now.
• Capture power grid upgrades and transition plays through the 40 power grid technology and infrastructure stocks. Review them before the crowd prices in the next wave of infrastructure focused earnings stories.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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