Green Stocks March 3: Late Recovery Prevents Further Losses

Even as the overall picture remains glum, a late recovery seems to have reduced losses at our Green energy stocks today. Thus, large developers like Adani Green, NTPC Green and Tata Power turned green today, losses at heavy losses EPC firms like Waaree RTL, Sterling and Wilson Renewables and Shakti Pumps continuing to leave investors guessing on how much further the pain will continue. The heavy losses will continue to spook investors as they digest all the news around overvaluation or further correction in small and mid-cap stocks.

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But as we said last week, while a turnaround seems tough to see considering the selling pressure from sellers booking losses for tax write offs, a genuine return to value is already close for many of these stocks. Market feedback continues to indicate a red hot market for products and services, with the only caveat being perhaps a shift to quality as many firms will be caught out for delivering subpar projects.

The other worry is for firms that have borrowed or spent in anticipation of IPOs, plans that were made aplenty in Q3. With those plans looking increasingly at risk, with a huge hit on expected valuations, some firms will struggle to refinance their high cost borrowings as margins remain tight due to competition. However, considering our green energy pack has firms that have all raised significant funding recently, these firms should do well going forward, no doubt about that.