With currently less than 1 million households equipped with rooftop solar installations, the ambitious plan to increase this number to 10 million presents a colossal opportunity for growth and sustainability.
Embracing Solar Energy: A Booming Sector
The global push towards renewable energy has intensified as stricter taxes on fossil fuels come into play. Solar energy has emerged as a prime beneficiary of this shift, with promising potential and significant growth prospects.
India’s Solar Ambitions
India, in particular, has showcased a strong commitment to solar energy. The recent announcement by Prime Minister Narendra Modi to electrify one crore households with solar electricity exemplifies the government’s dedication to the cause. Currently, the number of households equipped with rooftop solar installations is less than 10 lakh, highlighting the immense untapped market potential in the country.
Government Initiatives and Fiscal Measures
In the Union Budget 2022-23, the Indian government allocated a substantial amount of Rs 195 billion for the Production Linked Incentive (PLI) scheme, aimed at accelerating the manufacturing of high-efficiency solar modules. The upcoming budget announcements by Finance Minister Nirmala Sitharaman are eagerly anticipated by investors, as they hope for additional stimulus for the flourishing solar sector.
Rapid Growth and Market Performance
With the targeted installed renewable energy capacity of over 450 GW by the end of the decade, with over 60% expected from solar, the sector’s growth trajectory is remarkable. This growth trend is further exemplified by the recent successful market debut of Australian Premium Solar shares, which listed at over 150% premium over its IPO price. The company specializes in the manufacturing of monocrystalline and polycrystalline solar panels, along with providing Engineering, Procurement, and Construction (EPC) services for various applications.
Investor Sentiment and Market Opportunities
The tremendous response to the company’s IPO, with a subscription rate of 464 times, underscores the bullish sentiment surrounding solar energy investments. Furthermore, the Chairman of the Indian Renewable Energy Development Agency (IREDA), Pradip Kumar Das, highlighted the substantial investment potential, estimating that achieving one crore of rooftop solarization would require an outlay of approximately Rs 1.25-1.5 lakh crore.
Future Outlook and Growth Prospects
India’s solar energy sector appears to be at an inflection point, poised for exponential growth. Once the solar ecosystem becomes self-sustaining, the growth potential for listed solar companies in the country appears limitless.
In the subsequent sections, we will delve into a comprehensive analysis of the major solar players in India and assess their growth prospects, providing valuable insights for investors and industry enthusiasts alike.
Top Companies Profiting from the Solar Boom in Indian
1. Indian Renewable Energy Development Agency (IREDA)
Many might wonder how a non-banking financial company (NBFC) could thrive in light of India’s solar energy boom. However, IREDA has strategically positioned itself as a trailblazing and customer-centric institution, dedicated to funding and advancing sustainable investments in renewable energy generation.
In parallel to how IRFC supports railway ventures, IREDA primarily targets the renewable energy sector.
The chairman’s estimation suggests that the rooftop solarization of one crore households will necessitate an expenditure of approximately Rs 1.25-1.5 lakh crore. Thus, IREDA is primed to experience a significant upswing as it finances an increasing number of enterprises in the renewable sector.
The company has identified 7 strategic areas for potential expansion, aligning with the Indian government’s focal points. These crucial sectors encompass Green Hydrogen and Derivatives (including Manufacturing), Pumped Hydro Storage Power Plants, Battery Storage Value Chain (including Manufacturing, Storage, Recycling), Offshore Wind, Green Energy Corridor, Rooftop Solar Power, and Green Mobility Value Chain (Fuel Cells, Charging Infrastructure).
Furthermore, IREDA places a strong emphasis on optimizing its borrowing costs. This proactive approach aims to bolster its competitiveness and profitability. To achieve exponential growth, the company is methodically refining its operational framework and nurturing a heightened focus on environmental and social management systems.
Given the government’s ambitious target of attaining a non-fossil energy capacity of 500 GW by 2030, along with the aspiration of achieving net zero carbon emissions by 2070, IREDA is poised for extensive expansion within this burgeoning industry.
2. Tata Power: A Solar Focus
Tata Power, a key player in the Indian energy sector and a subsidiary of the renowned Tata Group, has strategically positioned itself in the solar energy domain through its wholly-owned subsidiary, Tata Power Solar. This specialized arm of the company is dedicated to the manufacturing of solar modules, cells, and various other solar products, while also offering comprehensive EPC services for solar power projects.
Noteworthy Collaborations and Successes
Notably, Tata Power Solar secured a substantial order worth Rs 4.2 billion (bn) to supply 152 MWp solar PV modules for an NTPC project, showcasing the company’s competitiveness and capabilities in the solar energy market. Additionally, the company has forged a partnership with SIDBI with the aim of extending support to small and medium-sized enterprises engaging in solar initiatives.
Ambitious Growth Plans and Strategic Shift
Under the stewardship of its management, Tata Power has charted an ambitious growth trajectory, earmarking a significant capital expenditure of over Rs 600 bn over the next three years. This strategic move reflects the company’s strong commitment to steering away from new coal-based thermal power capacity, redirecting its focus towards expanding its foothold in the renewable energy segment, particularly solar power.
Financial Standing and Debt Management
To finance its formidable expansion plans, Tata Power has heavily relied on external borrowings, propelling the company to be counted among the top 5 heavily indebted companies in the market. Despite this, an analysis of the company’s financial structure indicates that a substantial portion of its total debt is long-term, with repayment obligations extending over a period of 2-3 years. This prolonged debt maturity profile serves as a strategic advantage, allowing ample time for the fruition of their clean energy projects and the generation of robust cash flows.
Tata Power’s pursuit of solar energy dominance is underpinned by a blend of strategic investments, notable successes, and a prudent financial approach. This holistic approach positions the company as a formidable player in the burgeoning Indian solar energy landscape, with its ambitious growth plans and steadfast commitment to clean energy paving the way for a sustainable and impactful future in the renewable energy sector.
3. Borosil Renewables: An Emerging Player in India’s Solar Market
In the realm of solar energy, Borosil Renewables stands out as the pioneering and sole solar glass manufacturer in India. Anticipating the potential in this sector, the company established its solar glass facility back in January 2010, positioning itself as a significant contributor to India’s solar panel glass industry. Currently, Borosil fulfills 40% of the country’s daily demand for solar glasses, amounting to 650 tonnes, with the remaining supply being reliant on imports from China and Malaysia. Adding to its prowess, the company exports nearly 20% of its solar panel glass production to European nations, including Germany, Spain, Portugal, Russia, and Turkey.
Recent challenges have surfaced for Borosil Renewables as it encountered a slowdown in the European Union market owing to stiff competition from heavily discounted modules imported from China and Southeast Asia. This market shift has impacted the company’s performance, as reflected in the modest net loss reported for the September 2023 quarter. The influx of low-priced solar glass, combined with the absence of import duties, influenced the company’s financial standing, despite maintaining a stable revenue of Rs 5.2 billion for the first half of FY24.
Looking ahead, Borosil Renewables is poised for a recovery as its German subsidiary gears up to operate at full capacity and commence the production of larger-sized glass in the subsequent quarter. To further fortify its position in the market, the company has invested a substantial amount of Rs 5 billion to expand its capacity, effectively doubling its solar panel glass production to 1,000 tonnes per day. With ambitious growth plans, Borosil aims to augment its capacity by an additional 1,100 tonnes per day with an eye on the 2025 deadline. Moreover, the company is venturing into the recycling business, signaling its intent to diversify and innovate in the evolving renewable energy landscape.
Borosil Renewables’ proactive investments and strategic expansion plans demonstrate its commitment to not only meet the burgeoning domestic demand for solar glass but also to leverage international markets. As the company navigates through the evolving dynamics of the solar industry, its growth trajectory and foray into recycling underscore a resilient approach to sustainable energy solutions.
4. Sterling & Wilson Renewable Energy: A Global Leader in Solar EPC Solutions
Sterling & Wilson Solar stands as a prominent global player in providing end-to-end solar engineering, procurement, and construction (EPC) solutions, targeting utility-scale solar power projects with a heavy emphasis on project design and engineering. The company takes charge of the entire project lifecycle, starting from conceptualization to commissioning, along with offering operations and maintenance (O&M) services. Notably, it is diversifying its renewable energy portfolio to encompass EPC solutions for hybrid energy power plants, energy storage, and waste to energy, showcasing its commitment to innovation and expanding its market presence.
Third Quarter Performance and Financial Outlook
The company recently disclosed its financial performance for the third quarter concluding in December 2023, impressively reducing its net loss to Rs 623.9 million (m) while concurrently recording higher revenues. It further bolstered its financial position by securing an impressive Rs 15 billion in December 2023, earmarked specifically for debt reduction, signifying a solid foundation for the upcoming growth phase. Sterling & Wilson Solar’s global CEO, Amit Jain, expressed confidence in the company’s trajectory post the successful QIP (Qualified Institutional Placement), highlighting its readiness to tap into the rapidly expanding solar EPC markets within India and on the international stage.
Order Inflows and Unexecuted Order Book
The third quarter saw the company’s total order inflows reaching over Rs 24 billion, reflecting a strong demand for its services and signaling robust growth prospects. As it stands, Sterling & Wilson Solar boasts an unexecuted order book valued at Rs 87.5 billion, underscoring its solid future revenue streams and sustained industry leadership.
Sterling & Wilson Solar’s proactive measures to enhance its financial stability, coupled with a successful expansion into diverse renewable energy segments, position the company favorably for sustainable growth and a formidable presence in the global solar EPC market. With an optimistic trajectory and a strong order book, the company seems poised to capitalize on emerging opportunities and further solidify its position as a leading force in the renewable energy sector.
4. Waaree Renewables: An Emerging Force in Renewable Energy
Waaree Renewables Technologies is a prominent player in the renewable energy industry, specializing in power generation and offering consultancy services. With a strong foothold in the market, the company boasts the largest solar panel manufacturing capacity in India, operating from facilities in Chikhli, Surat, and Umbergaon in Gujarat.
Strategic Collaboration and Business Development
In December 2023, Waaree Renewables inked a significant agreement with Australia’s 5B Industries, aiming to localize the production of the innovative 5B Maverick solar product in India. This strategic collaboration is set to unlock new possibilities for large-scale production and competitive deployment in the domestic and international markets. On another front, the company also secured a pivotal letter of intent for executing the engineering, procurement, and construction (EPC) work for a substantial 4.27-megawatt solar power project, showcasing the company’s growing portfolio of projects.
Impressive Performance and Growth Trajectory
During the third quarter of 2023, Waaree Renewables witnessed a remarkable surge in its solar engineering, procurement, and construction businesses, with revenues soaring by over 400%. This exceptional performance is further underscored by the company’s robust order book, boasting a capacity of more than 749 megawatts. The company’s management has conveyed a positive outlook, emphasizing the strength of its bidding pipeline, which continues to present promising opportunities for future growth.
Beneficiary of Favorable Policies and Market Developments
As a key participant in the renewable energy sector, Waaree Renewables stands to benefit from various government initiatives, including the Solar Park Scheme, PM Kusum, and the Grid-Connected Solar Rooftop Schemes. These supportive policies and initiatives are expected to further bolster the company’s position and drive its expansion in the market.
Market Response and Financial Developments
The recent unveiling of the solar rooftop initiative and the company’s decision to split its equity shares have generated significant market interest, leading to a notable uptick in Waaree Renewable’s stock performance in recent trading sessions. This surge in investor confidence is a testament to the company’s strategic direction and promising growth prospects in the renewable energy landscape.
Waaree Renewables’ strategic partnerships, impressive growth trajectory, and favorable market developments position the company as a formidable force in the renewable energy sector, with a promising outlook for future expansion and success.
5. Websol Energy: A Prominent Player in the Indian Solar Industry
Websol Energy stands out as a prominent manufacturer of photovoltaic monocrystalline solar cells and modules in India. Established as a fully export-oriented unit, the company initially focused on serving the European market, particularly Germany and Italy, as well as the US.
Featuring a product range spanning from 5 W to 220 W, Websol Energy has built a strong reputation for offering high-quality solar products catering to the diverse energy needs of residential, commercial, and industrial sectors. With over two decades of experience in the industry, the company has demonstrated a commitment to delivering reliable and efficient solar solutions.
Financial Performance and Strategic Shifts
Despite its long-standing presence in the solar energy sector, Websol Energy has faced financial challenges in recent times. The company has experienced consistent losses over the past six quarters and two financial years. However, there is optimism regarding a potential turnaround, as Websol Energy makes significant advancements in the solar market.
In a notable strategic move, Websol Energy has successfully reduced its debt-to-equity ratio over the past year, signaling a proactive approach towards financial restructuring and stability. This reduction in leverage reflects the company’s efforts to strengthen its financial position and create a more sustainable operating framework.
Anticipated Quarterly Earnings and Future Outlook
As the industry awaits the unveiling of Websol Energy’s quarterly earnings on 25 January 2024, market observers are keen to delve into the key financial metrics and management commentary. The upcoming financial report is expected to provide valuable insights into the company’s performance, potential trends, and strategic initiatives for the future.
With its resilience and ongoing strategic adaptations, Websol Energy’s trajectory in the solar energy sector remains a focal point of interest. Observers and stakeholders are eager to gauge the company’s progress and potential resurgence, reflecting the broader evolution of the Indian solar industry and its competitive landscape.
6. Adani Green Energy: A Powerhouse in India’s Renewable Energy Sector
Adani Green Energy, a major contender in India’s renewable energy industry, has been making substantial strides with an operational capacity of 4,763 megawatts (MW) for solar power plants and 647 MW for wind power plants as of September 2023, affirming its robust position in the market.
The company experienced a significant downturn from its 52-week high in January 2023, primarily attributed to Hindenburg allegations and its premium valuation. However, recent developments indicate a remarkable resurgence. This includes strategic measures such as scrapping acquisitions, proactively repaying debts to address cash flow apprehensions, and moderating the pace of expenditure on new projects.
Furthermore, Adani Green Energy is poised to set a new milestone by constructing the world’s largest renewable energy park, envisioned to yield a massive 30 gigawatts of solar and wind energy. This ambitious endeavor is anticipated to provide electricity to nearly 18 million households, reinforcing the company’s commitment to sustainable energy initiatives.
In another significant move, Adani Green Energy has recently concluded a power purchase agreement with the Solar Energy Corporation of India, solidifying a commitment to deliver 1,799 MW of solar power. This strategic partnership underscores the company’s proactive approach to expanding its influence and bolstering its position as a frontrunner in India’s renewable energy landscape.
7. Gensol Engineering: A Rising Force in Solar and EV Sector
Gensol Engineering has positioned itself as a formidable player in the solar consulting and EPC business, marking its presence in solar advisory, EPC, O&M, and monitoring & analysis services. Notably, the company achieved a significant milestone last year when it secured its initial international orders in the solar EPC segment, landing pivotal projects in Dubai.
Diversifying its portfolio, Gensol Engineering embraced innovation and ventured into the electric vehicle (EV) sector, establishing a manufacturing facility in Pune dedicated to the development and production of electric three-wheelers and four-wheelers. This strategic move underscores the company’s commitment to expanding its horizons and embracing the future of sustainable mobility.
Strong Q3 Performance and Growth Prospects
Gensol Engineering’s recent financial report for the third quarter highlighted a robust performance, signifying a noteworthy comeback. The company demonstrated its resilience by reversing its fortunes, turning a net profit of Rs 123.1 million compared to a net loss of Rs 19 million in the corresponding period of the previous year. This positive shift underscores its adaptability and strategic prowess in navigating market challenges.
Moreover, Gensol Engineering bolstered its portfolio by clinching its inaugural Green Hydrogen project, securing the NHPC’s Kargil Green Hydrogen Mobility Station EPC Project as the lowest bidder. This achievement marks a significant milestone and underscores the company’s commitment to sustainable energy solutions and diversifying its domain expertise.
Navigating Competitive Landscape
While Gensol Engineering is riding a wave of successes, it is essential to acknowledge the competitive dynamics it faces as a relatively smaller player in the solar EPC domain. Encountering formidable competition from well-established industry peers, the company must continuously innovate and differentiate its offerings to carve a distinctive niche and fortify its position in the market.
Gensol Engineering’s recent financial strides, coupled with its foray into the EV sector and the successful venture into Green Hydrogen, indicate a promising trajectory. The company’s prudent strategic maneuvers and ability to navigate through industry headwinds position it as an evolving force in the solar and sustainable energy landscape. As it continues to expand its order book and demonstrate financial resilience, Gensol Engineering is poised to chart a compelling growth story in the renewable energy and electric vehicle sectors.
8. Surana Solar
Surana Solar is a company involved in the production of solar photovoltaic modules, as well as the generation of wind and solar power energy, and the trading of other solar-related products. The company operates two manufacturing plants in Hyderabad.
Following Prime Minister Modi’s announcement regarding solar rooftop panels, the company’s shares experienced a significant surge and are currently locked in a 5% upper circuit. In the last quarter of December 2023, Surana Solar returned to profitability, reporting a net profit of Rs 1 million, a substantial improvement from the loss of Rs 15 million in the preceding September 2023 quarter. Despite its relatively modest size, Surana Solar is poised to capitalize on the burgeoning opportunities within the solar segment.
9. KPI Green Energy
KPI Green Energy offers solar power solutions, serving as an independent power producer (IPP) and providing engineering, procurement, and construction (EPC) services to captive power producers (CPP). The company has recently secured numerous orders for solar power projects, reflecting its growing presence in the industry.
Notably, KPI Green Energy secured its most substantial single order from specialty chemical firm Anupam Rasayan for the execution of a 40 MW wind-solar hybrid power project. Additionally, its subsidiary secured a new order for the implementation of a solar power project from Shree Varudi Paper Mill LLP, scheduled for completion in the financial year 2024-25. The company also obtained orders for a 2 MW and a 3 MW solar power project from Jayco Synthetics.
Amidst the heightened interest in solar power endeavors, KPI Green Energy’s shares have been enjoying robust demand following the company’s announcement of a bonus share issue at a ratio of one bonus share for every two held during its board meeting. Management remains bullish about the company’s prospects, anticipating more than 50% growth in its topline for the fiscal year 2024. This optimism stems from the increased execution of CPP orders and the commissioning of the 26.1 MW hybrid project.
These developments signify a promising trajectory for both Surana Solar and KPI Green Energy, reinforcing their positions in the dynamic and evolving solar energy market.
10. Solex Energy: A Bright Year Ahead
Solex Energy, a key player in the manufacturing of solar panels and other renewable energy devices, witnessed a remarkable surge in revenue. In FY23, the company’s revenue soared to Rs 1,617.1 million, a significant increase from the Rs 723.3 m in FY22. This growth was propelled by heightened order execution in both solar panels and EPC segments. Furthermore, the completion of a new plant in Surat holds promise for the company’s expansion, with an investment of approximately Rs 600 million to augment production capacity by 600 megawatts. Additionally, the temporary suspension of the Approved List of Models and Manufacturers (ALMM) mandate for the current year is anticipated to alleviate some challenges.
11. Taylormade Renewables: Pioneering Sustainable Solutions
Taylormade Renewables is at the forefront of manufacturing solar parabolic concentrating systems for steam generation, catering to various industrial applications including steam cooking. The company also specializes in producing components and conducting EPC work for renewable energy and solar thermal applications, particularly in the realm of parabolic concentrators. Its diverse product portfolio encompasses bio-mass cook stoves, Eco Chullas, and PV cells. Notably, Taylormade Renewables boasts a prestigious client base including ISRO, Jindal Power, Ami Organics, Vardhman Group, and Asian Paints, underscoring its influence in the industry.
12. Refex Industries: Riding High on Expansion
Refex Industries, renowned for its expertise in manufacturing and refilling refrigerant gases, strategically ventured into the power sector in 2022, marking its entry into the solar segment. While this segment currently constitutes around 3% of its operations, it is projected to experience substantial growth in the foreseeable future. The company has consistently demonstrated impressive financial performance over the past five years, with FY23 witnessing a threefold increase in revenue and a remarkable 157% surge in net profit. Exciting developments continue to unfold for Refex Industries, as the company’s board announced plans to deliberate on a proposal for stock split on 24 January 2024, underscoring its strategic initiatives for expansion and market visibility.
13. Insolation Energy’s Expansion & Growth
Renowned for its high-efficiency solar panel and module manufacturing, Insolation Energy operates a 200 MW SPV module production unit in Jaipur, covering an expansive area of more than 60,000 square feet. Since its SME route journey and subsequent listing in October 2022, the company has significantly expanded from a 50 MW panel production capacity to an impressive 700 MW capacity. Looking ahead, the firm is poised for further growth through an expansion strategy aimed at increasing its manufacturing capacity and venturing into new business verticals. In the fiscal year ending March 2023, Insolation Energy achieved record-breaking financial performance, with plans underway to boost its capacity by an additional 500 MW over the next two years, thus reaching a total capacity of 1,200 MW.
14. SJVN’s Renewable Energy Expansion
With a primary focus on hydropower production, pumped-storage power plants, and wind and solar energy, SJVN has established a significant presence through its six operational plants located across Arunachal Pradesh, Uttarakhand, Himachal Pradesh, and Nepal. The company demonstrates a robust power generation capacity of 2,091.5 MW, where hydroelectric power and pumped-storage power dominate at 1,912 MW, accounting for 91.4% of the total capacity. Meanwhile, solar and wind energy comprise smaller segments, contributing 3.9% (81.9 MW) and 4.7% (97.6 MW) respectively, while also operating an 86 km-long power transmission line.
In a strategic move towards bolstering its renewable energy portfolio, SJVN’s subsidiary, SJVN Green Energy Limited, secured a power purchase agreement with Bhakra Beas Management Board (BBMB) in September 2023. This agreement entails the development of an 18 MW Solar Power project for BBMB, slated for commissioning by August 2024. Additionally, SJVN Green Energy received an order for a 100 MW solar power project in Rajasthan. Furthermore, a milestone achievement was reached on January 1, 2024, with the launch of the Gurhah solar power project in Jalaun, Uttar Pradesh, generating an impressive 75 megawatts.
Embracing Diversified Clean Energy
Both Insolation Energy and SJVN exemplify the ongoing strides within India’s renewable energy sector, illustrating a dedicated commitment to clean energy production. With Insolation Energy’s bold expansion plans and SJVN’s significant renewable energy projects, the industry is witnessing a surge in sustainable energy initiatives. These developments underscore the escalating significance of green energy in meeting India’s growing power demands and fostering a sustainable future.
Debating Global Energy Consumption: A Financial Perspective
The subject of global energy consumption is amid a vigorous debate, with diverging views regarding the optimal level of energy utilization. Advocates of reduced energy consumption argue that the rapid acceleration in this domain is causing widespread environmental degradation, which, if left unchecked, could have detrimental long-term effects. Conversely, proponents of increased energy consumption assert that human prosperity and advancement are intrinsically linked to higher energy utilization, advocating for a substantial global surge in energy consumption.
Solar Industry Insights
On the frontier of this discourse is the solar industry, marked by significant advancements and shifting cost dynamics. Recent reports indicate that the cost of establishing a new solar plant has plummeted below that of a traditional coal-powered facility. Moreover, the cost per unit of solar energy has seen a remarkable reduction, plummeting by over fivefold in just the past decade. These revelations underscore the transformative potential of solar energy and its burgeoning economic viability in the contemporary energy landscape.
A Financial Analysis
From the vantage point of Smart Investor Digest, a pro-energy consumption stance is embraced, with a belief that such an approach particularly bodes well for the solar industry. Additionally, despite the fervent advocacy for Environmental, Social, and Governance (ESG) considerations, the unassailable truth remains that energy consumption, in its essence, is integral to economic activity and progress. This resolute belief underscores the enduring relevance and vitality of energy consumption within the financial realm.
Conclusion
In conclusion, the discourse on global energy consumption encompasses multifaceted perspectives, adorning it with complexity and nuance. While divergent viewpoints continue to color this dialogue, the undeniable strides made in the solar industry, coupled with the enduring significance of energy consumption in economic realms, impel a compelling reassessment of our perceptions and approaches towards energy utilization. As the global energy landscape undergoes transformative shifts, it is imperative to navigate this terrain with informed discernment and strategic acumen.
Disclaimer: This article is for informational purposes only. It does not constitute a stock recommendation and should not be construed as such.
