Talking about Adani Green Energy Fundamental Analysis is super important, especially after what happened with the Hindenburg’s report. This report that came out earlier raised big doubts and made claims about how Adani Group companies, including Adani Green Energy, handle their money and run their businesses.
Because of this report, which said pretty negative stuff about how the Adani Group works and how strong they are financially, a lot of people started feeling uncertain. This made investors and others who care about Adani stocks, including the ones from Adani Green Energy, not feel so good about them.
Doing a really good look into Adani Green Energy’s basic details becomes crucial. This helps us figure out how much money they actually have, how well they’re doing their work, if they’re going to grow more, and if they’re overall steady. When we check all these basic things, people who invest and experts can pick the right choices and get a clear idea of how well the company is actually doing. This can help clear up worries from the Hindenburg’s report and maybe make the market feel less negative.
About the Company- adani green energy fundamental analysis
Adani Green Energy Ltd. is a company that sells electricity produced from a 12 MW wind power project and also buys and sells other related things. The company started in 2015 and is part of the Adani Group. It’s like the main company of many smaller companies that all work on making renewable energy within the group. Their main work is making renewable energy and other related things.
At the end of the year 2022, they had working projects that make 5,410 MW of power, and they were building more projects that will make 15,024 MW of power. The company plans to spend $20 billion over the next 10 years to make more renewable energy. This will really help India reach its goal for renewable energy.
Adani Green Energy wants to make 25 GW of power by 2025 and even more, 45 GW, by 2030. They have big plans to help make lots of clean energy.
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Daily News
Adani Green Energy- Upcoming Projects
Adani Green Energy targets 45 GW of renewable energy by 2030
The company has a big aim. They currently make or are constructing power plants generating 20,434 MW of electricity. But they want to make it much larger – up to 45,000 MW or 45 gigawatts (GW) by 2030. This means they want to create a lot more clean energy. Billionaire Gautam Adani, owns this company that produces clean energy. They want to generate a lot of power from sources like the sun and wind. They’re doing this to assist India in reducing pollution and achieving a goal where they’re kinder to the environment.
At this moment, Adani Green Energy is making 8,316 MW of power using green sources. And they’re busy building more places that will create another 12,118 MW. Their vision for 2030 is to put all of this together, making a big total of 45,000 MW of electricity. To make this happen, their plan is to construct around 3 GW of power plants each year that get their energy from the sun and wind. This is really important because it helps make more clean energy and fights against climate change.
Adani Green Energy Fundamental Analysis: Essentials & Financials
Revenue and Growth: Adani Green Energy has recorded a robust trailing 12-month revenue of Rs. 8,333.00 Cr. The company’s growth trajectory is striking, with an impressive annual revenue growth rate of 55%.
Profitability: Examining profitability ratios, Adani Green Energy maintains a Return on Assets (ROA) of 1.55%, which might raise concerns for its future performance. The company’s Return on Capital Employed (ROCE) stands at 7.81%, and the Return on Equity (ROE) is even higher at 27.52%, indicating strong equity performance.
Valuation and Earnings: In terms of valuation, the Price to Earnings (P/E) Ratio is notably high at 139.5. This P/E Ratio is substantially above the sector average of 45.3 as well as that of its peers. Earnings per share for Adani Green Energy are reported at 6.83 Rs. per share.
Debt and Financing: Adani Green Energy’s financial structure reveals a significant Debt to Equity Ratio of 827%, indicating reliance on debt financing. This Debt to Equity Ratio of 9 is notably higher than the preferred value of 1, signaling a significant presence of debt in the company’s financing structure.
Dividend: The company’s dividend distribution for the current year is reported as Rs 0. Consequently, the dividend yield stands at 0%, indicating no current return for shareholders through dividends.
Shareholding Pattern
In the last quarter, there was a pledge of 0.34% of shares by the promoters. This brings the total pledged shares to 3.84% of their holdings. Moreover, the promoters’ ownership has slightly decreased from 57.26% to 56.27% during the June 2023 quarter.
On the other hand, Foreign Institutional Investors (FII/FPI) have shown an increase in their ownership from 17.13% to 18.25% in the same quarter. Additionally, Mutual Funds have also raised their ownership from 0.09% to 0.11%.
Notably, Institutional Investors have exhibited a rise in their holdings from 18.58% to 19.72% during the June 2023 quarter.
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Evaluating Financial Statements
Income Statements| Profit & Loss Statements
Total Operating revenues is an important factor because it helps to determine how much income a company is able to generate from its primary businesses. In a period of 5 years, that is, from March 2019 to March 2023, the total operating revenues has increased from 2,058 crores to 7,792 crores. The total operating revenues have increased by approximately 278.66% from March 2019 to March 2023.
Expenses: throughout the period, companies expenses is less than its revenues. It indicates positive financial health and profitability as the company is effectively managing its costs and operating efficiently, allowing it to generate more income than it spends.
Net Profit: Company’s net profit (Profit after Interest, Tax and Depreciation) has increased from -475 crores in March 2019 to 1,082 crores in March 2023. This impressive growth of around 327.79% over 5 years indicates the company’s enhanced profitability and effective management.
Earnings per share: The company’s EPS has also seen a rising trend in the past 5 years increasing from -3.03 Rs per share in March 2019 to 6.12 Rs per share in March 2023. The trailing twelve-month (TTM) EPS stands at 6.83 Rs per share. EPS indicates the good health of the company as it shows consistency in earnings. A positive and growing EPS favours the company.
Dividend Payout %: Throughout the 5-year period, the Dividend Payout % metric has consistently maintained a value of zero. This could indicate a lack of dividend distribution during this period, although it’s recommended to verify for any potential errors or inconsistencies in the data.
Cash Flows Statements
When it comes to checking out how a company is doing financially and if it’s in good shape, you definitely want to pay attention to its cash flow numbers. Handling the finances of a company is a big deal and you should really know the process of cash inflows and cash outflows of a company. This can be done by evaluating the Cash flow statements of a company.
After the Hindenburg’s report incidence, it has become crucial to asses the Cash flow statements while analysing Adani Green energy fundamental analysis.
Cash Flow From Operating Activities
Looking at the provided table, we can observe a significant shift in the company’s cash flow activities over a span of 5 years, from March 2019 to March 2023. The cash flows generating from Operating activities have undergone a substantial increase, climbing from 1,625 crores to 7,265 crores. This impressive growth signifies a rise of about 347.08% during this period.
Cash Flows from Investing Activities .
Conversely, the trend for Cash from Investing activities is quite distinct. It has displayed a negative trajectory and a declining pattern. Starting at -2,666 crores in March 2019, it experienced a further decline to -18,730 crores in March 2022, and though it slightly improved to -3,857 crores, it still remains in the negative territory. This signifies that the corporation has been spending more on acquisitions, investments, and other comparable operations than they are earning back from them. This can be a sign of growth ambitions, expansion, or strategic investments that haven’t yet generated profits.
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Cash Flows from Financing activities
In contrast, the Cash from Financing activities showcases variation. It rose from 1,045 crores in March 2019 to a peak of 15,986 crores in March 2022, followed by a decline to -2,973 crores.
The rise in Cash from Financing activities might show that the company got extra funds from outside, maybe by taking loans or selling some of its ownership (shares). This probably helped the company do things like expanding its business or taking care of its financial needs. The decrease afterward, even going negative, might be linked to things like paying back loans or buying back its own shares. A negative number here could also mean that the company is giving some of its money back to its investors, possibly as dividends or by buying back shares.
The overall Net Cash Flows have been subject to fluctuations throughout this 5-year period. In recent years, there has been an improvement from 383 crores in March 2022 to 435 crores in March 2023.
These things we’ve learned show that the company’s money situation is quite changing. It’s done well in making more money from its main activities, but it has had some difficulties when it comes to investing and financing activities. The way the Net Cash Flows have been going up and down also highlights how the company can adjust to different situations and how complicated its money stuff can be.
Comparison Between Income Statements And Cash Flows Statements.
These two financial aspects are closely connected, and there’s an important detail to consider. When the cash coming in from operating activities is more than the Net Income, it’s a good sign. It means the company is really good at making money from its main business activities. This hints that the company has a strong chance of growing even more in the future.
In case of Adani Green Energy, Cash Flows from activities in March 2023 stood at 7,265 crores while the Net Income in the same period stood at 973 crores. What this tells us is that they’re really good at making money from their main business operations. The fact that their cash flow is higher than their net income is a positive sign. It means they’re managing their money well and have the potential for strong growth in the future.
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Limitations of Adani Green Energy
Moving on next in our discussion of Adani green energy fundamental analysis, let’s talk about the important limitations of the company.
Non-Dividend Distribution: Despite consistent profits, the company isn’t distributing dividends to its shareholders.
Low Interest Coverage: The company exhibits a low interest coverage ratio, possibly hinting at difficulties in meeting interest payments.
High Debt to Equity Ratio: With a high Debt to Equity ratio of 9.23, the company appears to heavily rely on debt financing.
Elevated PE Ratio: The company’s current high Price to Earnings (PE) ratio of 138.86 raises questions about its valuation in the market.
Highlights Of Earnings And Revenue For Adani Green Energy- Annual/Quarterly
Over the past year, the company saw a substantial 54.8% increase in its annual revenue, reaching Rs 8,633 Crores. Additionally, the annual net profit surged by an impressive 99.2%, amounting to Rs 974 Crores. However, the stock price experienced a significant 57.2% decline and performed 58.1% below its sector average during the same period.
In the latest quarter, there was a notable 33.1% year-on-year rise in quarterly revenue, totaling Rs 2,404 Crores. Furthermore, the quarterly net profit also witnessed a solid 50.5% year-on-year growth, reaching Rs 322 Crores.
ADANI GREEN ENERGY revenue for the last year amounted to 86.33B INR, the most of which 58.25B INR came from its highest performing source at the moment, Power Supply, the year earlier bringing 37.83B INR. The greatest contribution to the revenue figure was made by India last year it brought ADANI GREEN ENERGY 77.92B INR, and the year before that 51.33B INR.
BOTTOM LINE
We are now able to state the important implications of the Adani green energy fundamental analysis. Although there have been concerns following some incidents, the company’s expansion of operational capability, ambitious targets for renewable energy, and rising cash flows from routine operations all point to some promising developments. However, due to significant debt, poor interest payment coverage, and a relatively high Price to Earnings (PE) ratio, caution is advised. It’s also critical to keep an eye on the company’s dividend practises and stock performance. When all of these factors are considered, the path of Adani Green Energy tells us a lot about the changes taking place in the renewable energy industry as well as the different components of its financial health and development possibilities.
Disclaimer
The blog is meant for informational purposes and serves the general analysis of the stocks. Contents provided here are based on careful research and analysis utilizing the fundamental and technical indicators over a period of time. The post does not consist any direct recommendation about Investing or trading in the securities market. Thorough research and careful consideration are necessary for individuals to fulfill their personal responsibility in making financial decisions. Seeking professional advice before making any financial decisions is always advisable.
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