The Top 5: India’s Listed Renewable Energy Firms Enjoy A Fine Run At Bourses

As India girds up for one of the biggest renewable energy transitions in the world, private sector participation as been a critical pillar of this transition. With ever widening scope and ambitious targets, led and announced by Prime Minister Modi himself, no one has any doubts on the potential growth and future of the renewable energy sector. What is important for many is that this growth be achieved profitably, and by delivering returns that will continue to attract more investments for the sector. Various estimates have placed an annual investment requirement of $20 billion for India to meet its climate goals.

India’s installed renewable energy capacity has increased over 280 percent in the last 8 years.

India’s current capacity, including large Hydro, stands at 151.4 Giga Watts (as of 31st December 2021) – Wind (40.08 GW), Solar (49.34 GW), and Large Hydro (46.51 GW), while the Bio-Power (10.61 GW) and Small Hydro Power (4.83 GW) are also picking up pace.

What that means is that India has been ranked 3rd in renewable energy country attractive index for 2021 by consulting firm EY.

The government of India has set targets to reduce India’s total projected carbon emission by 1 billion tonnes by 2030. This also includes aim to reduce the carbon intensity of the economy by less than 45 percent by that time. In line with its target to achieve 500GW capacity by 2030, India set target to achieve net-zero carbon emissions by 2070. This gives a once-in-a-lifetime growth opportunity to the new players as well as energy behemoths in the renewable energy market of India.

So, how are India’s listed renewable energy firms faring in the stock markets? Is their performance good enough to attract more players to the list? And investors to bite? We look at the 5 key listed firms to give you a measure of the substance and the hype.

#1 Tata Power

Tata Power is India’s largest listed integrated renewable energy firm by many measures. Be it utility scale solar plants, rooftop solar, solar pumps, or wind energy and hydro, the firm has it all. It was also one of the earliest large power firms to commit to no fresh thermal capacity way back in 2018-19.  The company also has several subsidiaries like Tata Power Renewable Energy, Tata Power Solar Systems (for manufacturing solar cells and modules) , and Walwhan Renewable Energy (WREL). As a discom with plans to acquire more circles when they become available, the firm might in time become one of the largest buyers of renewable energy too. It’s EPC division has an order book of over Rs 10,000 crores as of December 2021.

Tata Power’s FY-21 Revenue was up by 14% at Rs.33,079 crore in comparison to Rs.28,948 crore for FY20. This was mainly due to Odisha DISCOMs acquisition and higher execution of solar EPC Projects. Further, its consolidated PAT stood at ₹1,424 crore at the end of FY21 against ₹1,231 crore for FY20.

On 22 March 2022, Stock Price for the firm closed at Rs.231.40, more than doubling from a year back on 22 March 2021 which was Rs.103.46. The firm has delivered on the promises and buy recommendations from multiple stock analysts, leaving its investors a pleased lot.

Even as it ventures into newer but related segments like EV charging and battery storage, the company has explored the option of setting up a renewable energy infrastructure investment trust (InvIT) with its operational renewable power assets as well. TVS Motor recently entered into a partnership with Tata Power to set up charging infrastructure across the country.

Tata Power targets a renewable capacity of 15 and 25 GW by the years 2025 and 2030, respectively. Clean energy currently makes up 32% of Tata Power’s portfolio. The company plans to increase this further to 40% by 2025 and 80% by 2030.

#2 Adani Green Energy Limited

Gautam Adani, the founder of the Adani group has recently indicated company’s plans, including a war chest of $70 billion dollars for the renewable energy space. Adani Green Energy Limited (AGEL), as the group’s renewable energy developer has a vital role to play in those plans. AGEL has in-operation and under construction solar power of 4763 MW and 10080 MW. Similarly, in operation and under-construction wind power is 647 MW and 2054 MW capacities, respectively. The well funded firm is one of the biggest buyers in the market for renewable energy assets, pulling off some of the largest deals in the past two years, notably, its acquisition of SB energy’s 5 GW portfolio for $3.5 billion.

Registering over 33 percent growth AGEL’s total income in Financial Year 2020-21 rose to Rs 3,520 crore from Rs 2,629 crore a year earlier. During this period, the company also posted a net profit of Rs 182 crore, as against a loss of Rs 68 crore in 2019-20.

Observing stock price change in one year, AGEL stock has shown outstanding improvement in its value. The price stood at Rs.1252.20 on 22 March, 2021, while by 22 March, 2022, it rose to Rs.1877.45. If that sounds impressive, consider the fact that the stock price a year further back was just Rs 135! That has made it one of the blockbuster stocks across sectors in the past 2 years.

Adani Green became top solar developer based on its operational, under-construction and awarded projects, and intends to maintain that ranking. It counts French oil and gas major Total Energies as a strategic partner.

AGEL targets 45 GW renewable energy capacity by 2030. In addition, AGEL is set to invest $20 billion in renewable energy development over the next decade. The firm looks to develop a 2 GW per year solar manufacturing capacity by FY 2022-23. Apart from solar and wind, we’ll also be able to see hybrid power from the Adani group. A 2740 MW facility is under construction for the same. Adani Green Energy Limited aspires to become the world’s largest solar power company by 2025 and the largest renewable power company by 2030.

#3 Websol Systems

Websol Energy Systems Limited is a listed Kolkata-based manufacturer of solar cells and modules. It is a manufacturer of photovoltaic monocrystalline solar cells and modules in India, approved and listed in the government’s ALMM list too. The Company has successfully managed to enhance its production capacity to evolve as a 250 MW solar cells and 250 MW modules manufacturer. The firm exports solar cells to Europe and North Africa.

The company reported a 24 percent lower income of Rs.158 crore in Fiscal Year 2021 compared to Rs.206 crore in the FY20. The income in FY 2021 was largely due to sales of 158 MW of cells and 8MW of solar modules.

Despite revenue dipping in FY21, the stock price in last 1 year saw Websol Energy System stock pushing up over 200 percent. On 22 March 2022, Stock Price of Websol systems was just shy of three-digits closing at 99.60, while on 22 March 2021 it closed at Rs.44.90. Websol is clearly benefiting from the high expectations from the RE sector, and will need to deliver soon, to maintain the uptrend in stock price.

#4 Borosil Renewables

Mumbai-based Borosil Renewables is the only solar glass manufacturer in India. That, at a time when there is a global solar glass shortage, and anti dumping duties on Chinese imports, is a recipe for amazing turnarounds. The firm also claims to be the largest non-Chinese solar glass manufacturer in the entire world. The total demand for solar glass in India is 650 tonnes per day. Apparently, the 60% of this comes from Malaysia and China, and the rest 40% by Borosil. In addition, the company exports solar panel glass to Europe, mainly in Germany, Spain, Portugal, Russia, and Turkey.

For full financial year 2021, its revenues added up to Rs.507.63 crore with an annual growth of over 85% y-o-y. For FY 2020, it was roughly half – Rs.274.76 crore. The firm is on a massive expansion spree, and expects to top out with capacity at 5 GW equivalent production per day by 2023-24.

Borosil Renewable’s stock price has mirrored the changing circumstances, being counted as one of the biggest turnaround stories. . Its stock price was Rs.258.95 as on 22 March 2021. Since then, the price shot up by over 142 percent in last one year, holding at 593.75 as of 22 March 2022. The turnaround story? The stock was trading at just Rs 38 on March 23, 2020!

#5 Sterling and Wilson Renewable Energy Ltd

And now, for perhaps the most disappointing story among listed RE players. Sterling and Wilson Renewable Energy Ltd (SWREL) is among the top EPC manufacturers in the world, and when it came to the markets for a listing, it drew strong response at a price of Rs 780 per share in August 2019. A part of the Shapoorji Pallonji Group at the time, it is an end-to-end solar engineering, procurement, and construction (EPC) solutions provider. It was formerly called Sterling and Wilson Solar Limited (SWSL).

A corporate governance mishap, in the form of loans to promoters that could not be recovered on schedule due to tough market conditions saw the stock punished severely by investors.  Even as its field performance remained impeccable, with prestigious projects landing with it regularly, and the firm continuing to be a formidable competitor in global bids. Eventually, it has taken its acquisition by the Reliance group, to help arrest the slide and hopefully put the firm back on a steady growth path.

Sterling and Wilson Renewable Energy registered a revenue of Rs.50.8 billion from the operations in FY21. This is down by 8.8% compared to FY20 when the company earned Rs 55.75 billion.

On 22 March 2022, its stocks valued Rs.316.9. Same day a year ago, on 22 March 2021, the stock price was Rs.264.95. Keep in mind that the Reliance acquisition price was Rs 375 per share for a 40% stake.

With the firm moving swiftly into EPC work for storage, besides waste to energy to add to its solar portfolio, the firm could be the next big turnaround story in the listed renewable space, as the Reliance renewable plans move into high gear on the project development side too.