By Siddhant Mishra
The commitment by India to attain non-fossil energy capacity of 500 GW by 2030 and to meet half its energy requirements from renewable energy by the same year has put the spotlight on renewable energy firms. However, the stocks of green energy firms have seen some fluctuations in the markets, suggesting that investor sentiment is still not quite strong.
Among the major green energy stocks, only NHPC and Websol Energy have showed an upward trend in the last three months, while Adani Green, Tata Power, Borosil Renewables and Inox Green — which hit the market recently — have all seen their share prices slide.
In comparison, India’s benchmarks Sensex and Nifty have advanced nearly 7.7% and 7.2%, respectively during this period.
Adani Green Energy, which commands a market cap of Rs 3.35 trillion, gained 0.15% to close at Rs 2,112.60 on Thursday. However, it has dropped 11.7% in three months. Despite a revenue of Rs 2,912 crore as of September 2022, the firm had registered a quarterly net loss of Rs 93 crore and an EPS of -0.68.
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According to reports, Adani Green remains among the most leveraged in the Adani group, and carries Asia’s second-worst debt-to-equity ratio of 2,021%. Eric Liu, credit desk analyst at Nomura Holdings in Hong Kong, had said in an August report that the Adani group’s aggressive expansion was a negative overhang for credit investors, keeping in mind the fact that much of its M&A activity of late has been debt-funded.
Among the others, NHPC, which has an m-cap of Rs 42,239.37 crore, had a negative cash flow of Rs 712 crore in the September 2022 quarter, according to its quarterly financial statements. It’s long-term debt/working capital ratio was up at 10.56, compared to 9.32 and 8.40 in the preceding quarters. The stock closed at Rs 42.05 on Thursday, unchanged from its previous close. It has gained 12.13% in the last three months.
Inox Green, the most recent entrant, fell 8% on listing day (23 November) to record a disappointing debut. It had recorded losses to the tune of Rs 100.7 crore as of the June 2022 quarter, with an EPS of -3.75. Though it has a debt-to-equity ratio of 0.3, a debt service coverage ratio of (0.42) shows it may not have the capacity to repay current obligations without external support. The scrip fell 0.49% to Rs 60.40 on Thursday, and is trading at 7.08% lower to its issue price of Rs 65 apiece.
Websol Energy, with a Rs 340 crore m-cap, has rallied between a 52-week low of Rs 67.30 and high of Rs 172.75. The firm registered a quarterly net loss of Rs 38.8 crore in September, with an EPS of -1.06. It also recorded negative cash flow of Rs 2.18 crore during the quarter and a P/E ratio of close to -38, which could be a drag despite the stock having gained 1.15% in three months.
Those relatively better placed have also been trending down. Analysts say rising interest rates globally, along with higher energy prices, could be adding to the pressure on alternative sources of energy.
Tata Power, which commands a market cap of Rs 71,831.23 crore, closed up 0.02% at Rs 224.85. However, it has shed over 5.21% in three months, despite a healthy debt/equity ratio of 1.8 and a strong debt service coverage ratio at 1.63.
Borosil Renewables, with an m-cap of Rs 7,075.70 crore, closed down 0.3% at Rs 541.65, having declined 3% in three months. However, with a healthy debt/equity ratio of 0.2, the firm’s balance sheet is quite healthy compared to its peers.
