Best Solar Energy Stocks in India: Riding the Renewable Wave

As part of the commitment made at COP26 and aligned with the Panchamrit initiative, India has raised its target to achieve 500 GW of non-fossil fuel-based energy by 2030. The nation’s electricity demand has experienced a significant surge, with projections indicating further growth in the coming years. India holds the global rank of 4th in Renewable Energy Installed Capacity, 4th in Wind Power capacity, and 4th in Solar Power capacity, as per the REN21 Renewables 2022 Global Status Report, the spotlight is on the best solar energy stocks in India.

As per the Govt. website of Invest India, as of July 2023, Renewable energy sources, including large hydropower, have a combined installed capacity of 176.49 GW. The following is the installed capacity for Renewables:

-Wind power: 43.7 GW
-Solar Power: 70.1 GW
-Biomass/Co-generation: 10.2 GW
-Small Hydro Power: 4.94 GW
-Waste To Energy: 0.55 GW
-Large Hydro: 46.85 GW

By the end of the decade, India aims to have reduced its economy’s carbon intensity by less than 45%.

Trends in the Growth of Solar Power Landscape and the solar energy stocks in India

In a noteworthy development, the Indian government has given the green light to 57 solar parks, boasting an impressive aggregate capacity of 39.28 GW. As of November 30, a total of 50 solar parks, with a combined capacity of 37,490 MW, have received approval across 12 states, revealed The Economic Times. This information was made public at a Rajya Sabha meeting when R K Singh, the Minister of New and Renewable Energy, gave details about the ongoing initiatives to increase solar energy usage in the nation.

The government’s initiative, the “Development of Solar Parks and Ultra Mega Solar Power Projects” scheme, is actively driving this expansion, with a targeted capacity of 40 GW. Singh highlighted that, under this scheme, 50 solar parks with a total capacity of 37,490 MW have been sanctioned in various states as of November 30. Impressively, 10,401 MW of solar projects have already been commissioned in 19 solar parks.

Gujarat leads with 12,150 MW, followed by Rajasthan, Andhra Pradesh, Madhya Pradesh, Uttar Pradesh, and Karnataka. In the midst of the solar park revolution, there’s no doubt that solar energy stocks in India stand poised to reap substantial benefits.

Also read: Exploring The Best Green Energy Stocks For The Future

AatmaNirbhar Bharat and the solar energy stocks in India

A financial allocation of INR 24,000 Cr has been earmarked under the AatmaNirbhar Bharat initiative for the Production-Linked Incentive (PLI) scheme in Solar PV manufacturing. Mandatory implementation of rooftop solar installations and a requisite 10% utilization of renewable energy. Commencing on April 1, 2022, a Basic Customs Duty of 25% on Solar Cells and 40% on Solar PV Modules has been imposed. 

Best Solar Energy Stocks in India

The Best Solar Energy Stocks in India are: Websol Energy System Ltd, Urja Global Ltd, Tata Power Company Limited, KPI Green Energy, Waaree Renewables Technologies Ltd.

Let’s discuss few facts about these companies.

Websol Energy System Ltd

Websol Energy System Limited (WESL) tops the list of best solar energy stocks in India. On December 19, 2023, WEBEL Solar achieved its 52-week high, reaching a record-breaking Rs 288 per share. This milestone gains significance as its 52-week low, set on March 28, 2023, was a mere Rs 62.75. The remarkable rise amounts to approximately 358.65%.

The company has been in the solar business since 1994, making and selling solar photovoltaic cells and modules. In 2008, they added PECVD to make more efficient solar cells, getting international certifications IEC 61215 and IEC 61730 for their 180Wp/220Wp solar modules and improving cell efficiency to 16.5% and more. Websol has won awards and certifications, making it one of India’s few tech-savvy solar manufacturers.

Their Webel Solar monocrystalline PV modules meet strict quality standards, aligning with the Indian government’s goal to produce 300 GW of solar power by 2030 and cut one billion tonnes of carbon emissions by the decade’s end. To meet the growing demand for solar cells and modules, Websol is expanding to 550MW for modules and 2.4GW for cells in two phases. The first phase includes 600 MW of solar cells and 550 MW of solar modules, while the second phase has 1.8 GW of solar cells.

FUNDAMENTALS

The current fundamentals of the company don’t seem promising. Both profitability ratios, with ROE at -11.1% and RoCE at -11.2%, indicate a concerning trend. The negative Price to Earning Ratio at -50.33 adds to the worrisome signs. Moreover, the Annual Revenue dropped sharply by a significant 90.71% in the last year, reaching Rs 20.23 Crores. Although the Promoter Share Holding remained stable at 26.77% in the most recent quarter, the company’s Dividend Yield is stagnant at 0.00%. On a positive note, the Debt to Equity Ratio of 0.14 is commendable, being less than 1, signifying healthy financing through equity. Additionally, the Stock Price exhibited a remarkable rise of 170.78% in the past year, outperforming its sector by an impressive 91.44%.

Also read: EKI Energy Fundamental Analysis: Profit Potential Or Pitfall?

Urja Global Ltd

With over two decades of experience, Urja Global Limited has emerged as a prominent industrial player and a well-diversified conglomerate actively involved in Renewable Energy, IT&ITES, Tours & Travels, and Education & Training. The organisation is well-known around the world as one of India’s top developers and operators of renewable energy projects. Urja Global engaged in the entire process from design and consultancy to integration, supply, installation, commissioning, and maintenance of both off-grid and grid-connected Solar Power Plants. 

The Company’s products include solar street lights, solar water heaters, solar lantern and portable light, solar panels, solar home lighting system, solar battery charger and solar cookers. Solar, hydro, and thermal projects are among its undertakings. The projects that use solar energy include the Andhra Pradesh, Gujarat, Rajasthan, and Haryana projects. Urja Global Limited, based in Rajasthan, India, is run by a vibrant group of entrepreneurs.

In terms of fundamentals, this stock qualifies as a penny stock with a Market Cap of ₹736 Cr. However, the profitability ratios paint a subdued picture with ROCE at 1.55% and ROE at 0.89%. The Price to Earning Ratio stands at 364.96, surpassing its sector PE ratio of 91.42. Over the past year, the Annual Revenue witnessed a decline of 44.44%, amounting to Rs 41.41 Crores. Notably, there was a 4.58% decrease in Promoter Share Holding in the most recent quarter, now resting at 22.56%. Despite a stagnant Dividend Yield of 0.00%, the Stock Price managed a 45.08% increase, albeit underperforming its sector by 39.29%. On a positive note, the Debt to Equity Ratio impressively stands at 0.02, indicating healthy financing through equity. This implies that the majority of its assets are financed through equity.

Also read: Best Green Hydrogen Stocks In India: Profit With Purpose

Tata Power Company Ltd 

Reaching its pinnacle on December 20, 2023, the stock achieved a 52-week high of Rs 346.90 per share, signaling a substantial upward shift. Conversely, on March 28, 2023, the stock experienced its 52-week low at Rs 182.35, reflecting a noteworthy downturn. The percentage change is approximately 90.16%.

As of March 31, 2023, the company boasts an installed capacity of 14,110 MW, with a significant 5,250 MW sourced from ‘Clean and Green sources’ like Hydro, waste heat recovery, wind, and solar, making up about 37% of our total portfolio. Moving into H1FY24, the energy capacity has expanded to 14,381 MW, encompassing 8,860 MW Thermal, 1,007 MW Wind, 880 MW Hydro, 443 MW Waste Heat Recovery/BFG, 3,191 MW solar, and 3,760 MW Renewable capacity currently under construction.

Pioneering smart energy solutions, TATA Power aims to produce electricity completely through renewable sources. The company has introduced efficient and cost-effective electricity usage. The efforts include adding 684 MW Solar PV assets to operating portfolio, supplying power to Discoms and captive consumers, and implementing around 23 MW of rooftop projects.

Notably, TATA Power’s subsidiary, Tata Power Solar Systems Limited (TPSSL), has achieved the commendable milestone of commissioning 1.5 GW of Utility-scale projects. As of March 31, 2022, the company oversees 61 subsidiaries, including 41 wholly-owned subsidiaries, 32 JVs, and 5 Associates, with 3 companies classified as JVs among the subsidiaries.

Fundamentals

TATA Power showcases impressive fundamentals. Notably, profitability ratios are decent, boasting an ROCE of 11.7% and ROE of 12.6%. The Price to Earning Ratio stands at a modest 29.23, indicating a favorable position compared to its sector’s PE ratio of 57. Over the last year, Annual Revenue experienced a notable surge, rising by 29.29% to reach Rs 56,547 Crores. Promoter Share Holding remained unchanged at 46.86% in the most recent quarter. In the current fiscal year, Tata Power’s dividend stands at Rs 2 with a yield of 0.61%. A significant positive is the Stock Price, which escalated by 56.37%, outperforming its sector by 8.78% in the past year. However, a potential concern arises from the Debt to Equity Ratio, standing at 1.74, exceeding the recommended 1.

Read more here: Tata Power Fundamental Analysis: Illuminating Opportunities

KPI Green Energy Ltd

Next on our roster of best solar energy stocks in India is KPI Green Energy Ltd. On March 28, 2023, the company hit its 52 Week Low at 390.00. Since that point, KPI Green Energy has demonstrated exceptional performance, staging a remarkable comeback and achieving its 52 Week High of 1,413.90 on December 13, 2023. The growth during this period stands at an impressive approximately 262.82%.

The company operates as a solar power generator with a focus on delivering solar power both as an Independent Power Producer (‘IPP’) under the brand name ‘Solarism’ and as a service provider to Captive Power Producer (‘CPP’) customers. Currently, the company boasts an installed capacity of 100 MW of solar power under the IPP segment and 100 MW+ in EPC/CPP projects.

As part of its expansion efforts, the company augmented its solar power generation capacity by initiating a new project for 25 MW at Sudi, Samiyala & Tanchha village, Amod, Bharuch, Gujarat. The estimated cost of this project was Rs. 13,203.76 Lakh, and it was scheduled for commercial commencement in July 2019. Notably, the company has received the ‘Excellence In Solar Park Award – 2016’ from the Mission Energy Foundation, Mumbai. Additionally, the Promoter has been honored with the ‘Legends of Surat – 2018’ award by Gujarat Mitra, a leading newspaper in Gujarat.

Fundamentals

A mid-cap company, with a Market Cap of ₹5,054 Cr., showcases remarkable profitability ratios, featuring an impressive ROCE of 24.7% and ROE of 53.4%. Notably, the Price to Earning Ratio is 37.65, surpassing its sector PE ratio of 57. Demonstrating robust financial performance, the Annual Revenue surged by a substantial 179.48% in the last year, reaching Rs 647.03 Crores.

In terms of ownership stability, Promoter Share Holding saw a slight increase of 0.02% in the most recent quarter, reaching 54.83%. The current-year dividend for KPI Green Energy stands at Rs 2.85, with a yield of 0.21%. There is a significant rise in Stock Price by 218.69%, outperforming its sector by an impressive 171% in the past year. A noteworthy concern arises from the Debt to Equity Ratio, standing at 2.02, exceeding the recommended 1. This suggests that the company’s assets are primarily financed through debt, warranting careful consideration.

Also read: Adani Green Energy Fundamental Analysis: From Crisis To Clarity

Waaree Renewables Technologies Ltd

Waaree Renewables Technologies Ltd stands out among the top solar energy stocks in India. Notably, the company’s stock experienced a 52-week low of 470.00 on 11/01/2023. Impressively, it surged to an outstanding 52-week high of 2,703.95 on 05/01/2024, marking a remarkable percentage change of approximately 475.94%.

Waaree Energy stands out as one of the largest vertically integrated new energy companies in India. Boasting a massive solar panel manufacturing capacity of 12GW, the company operates from plants in Chikhli, Surat, and Umbergaon, all located in Gujarat. The company has ambitious plans to expand its Cell Capacity by 5.4 GW by FY24. Managing a substantial 490+ MW O&M Portfolio of solar power plant assets, Waaree Energy demonstrates impressive efficiency, utilizing over 99% of plant available time and achieving 80%+ PR for the assets under management.

The company’s order book is robust, currently standing at 856+ MW, and it has recently executed orders totaling 96+ MW in Q1FY24. Notably, Waaree Energy has secured a contract to establish a 1 MW Green hydrogen Plant, integrated with the ecosystem on a BOB (Build-Own-Operate) basis. The company has bagged an order of 4.27 MW capacity solar project. The order has been secured from a leading integrated glass and window solution company.

Fundamentals

Waaree Renewables, a mid-cap company with a Market Cap of ₹ 5,489 Cr., showcases impressive profitability with an ROCE of 83.8% and ROE of 95.8%. Despite a higher Price to Earning Ratio at 82.85, surpassing its sector PE ratio of 64.48, the company reports robust financials. The Annual Revenue surged by 107.57% in the last year, reaching Rs 352.48 Crores.

Promoter Share Holding witnessed a marginal decrease of 0.03% in the most recent quarter but remains solid at 74.48%. The current-year dividend for Waaree Renewables is Rs 1, yielding 0.04%. The Stock Price exhibited remarkable growth, rising by 434.44% and outperforming its sector by an impressive 374.73% in the past year. Additionally, the company maintains a healthy Debt to Equity Ratio of 0.46, being less than 1.

Benefits of Solar Energy Stocks in India

Renewable Energy Growth: Solar energy stocks in India benefit from the country’s commitment to renewable energy, with ambitious targets driving demand.

Government Initiatives: Favorable government policies and incentives, such as tax benefits and subsidies, support the growth of solar energy companies.

Environmental Impact: Investing in solar energy stocks aligns with global efforts to reduce carbon emissions and promotes environmentally sustainable practices.

Limitations of Solar Energy Stocks in India

Dependency on Sunlight: Solar energy generation is dependent on sunlight, making it intermittent and challenging during nighttime or cloudy days.

Initial Investment: High upfront costs for solar projects and infrastructure can impact the short-term profitability of solar energy companies.

Technological Risks: Rapid technological changes may lead to the obsolescence of existing technologies, impacting the competitiveness of solar energy companies.

Also read: SJVN Fundamental Analysis : Market Positioning

BOTTOM LINE

Solar Energy sector is indeed the future of the country and the world. With the country’s ambitious renewable energy goals and supportive government initiatives, opportunities in solar sector become more than just a financial choice. Now it’s a contribution to the global push for sustainability and reduced carbon emissions. The best solar energy stocks in India are all in the race to reap the benefits of this ongoing global shift towards sustainable practices. The way towards a more sustainable, brighter, and cleaner future is illuminated by the rising solar energy supplies, while traditional energy sources are losing their significance.

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.