Power shares regained momentum in 2023 as new coverage initiatives drove investments within the sector. The Nifty Power Index doubled between March 1, 2023 and September 27, 2024, with inexperienced power shares main the rally. A number of small and medium sized renewable power corporations capitalised on this bullish momentum and their sturdy income and earnings progress in FY24 to make their debut within the inventory market.
The driving power behind this surge is India’s formidable goal of reaching 500 GW of renewable power capability by 2030. Up to now, the nation has crossed 217 GW, with 27.9 GW added in 2024 alone. Whereas this progress is spectacular, reaching the five hundred GW milestone would require an annual capability addition of fifty GW — a problem the sector is able to embrace.
Nonetheless, the Nifty Power Index has dipped 30% from its September 2024 peak, making traders marvel if the inexperienced power growth has hit a pace breaker. For this one wants to know what elements are influencing the business’s future progress prospects.
Three traits are shaping up within the renewable power house.
- A number of small inexperienced power corporations are launching IPOs to finance their photo voltaic and wind tasks.
- Large gamers like JSW Power, ONGC, and Adani wish to obtain their net-zero emission targets by buying renewable power corporations.
- The federal government is pushing for home manufacturing of photo voltaic PV cells, grid-scale batteries, wind generators, high-voltage transmission tools, and electrolysers, to facilitate renewable power business.
Inexperienced power IPOs queue up
Over 298 IPOs raised Rs 1.4 lakh crore in India in 2024, led by power and manufacturing sectors. The mix of producing and inexperienced power was a giant hit in 2024 as IPOs of photo voltaic photovoltaic (PV) module makers made a blockbuster debut within the inventory market.
India’s two largest photo voltaic PV module makers, Premier Energies and Waaree Energies, listed on the NSE at premiums of 120% and 66.33%, respectively, from their IPO costs in September and October 2024. In February and July 2024, small and medium enterprises (SME) IPOs — Alpex Photo voltaic and Ganesh Inexperienced Bharat — additionally listed at premiums of 231% and 90%, respectively.
Nonetheless, by November 2024, traders’ enthusiasm started to wane. NTPC Inexperienced Power inventory listed on the NSE at a 3% premium whereas Acme Photo voltaic Holdings inventory listed at a 13.15% low cost.
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Upcoming inexperienced power IPOs
Regardless of the cooling sentiment, a number of renewable power gamers have filed their draft pink herring prospectuses with SEBI. Amongst them are Vikram Photo voltaic, Solar91 Cleantech, Solarworld Power, Continuum Inexperienced Power, Solarium Inexperienced, PMEA Photo voltaic Tech Options, Saatvik Inexperienced Power, and GK Power.
In 2025, to date, BSE postponed Solar91 Cleantech IPO to deal with queries round the usage of IPO proceeds, whereas photo voltaic EPC supplier Solarium Inexperienced Power listed on 13 February 2025 at a 5.7% premium.
This raises a query: Is the tepid IPO response since November 2024 as a result of traders’ urge for food for inexperienced power has lowered or is there another excuse?
The manufacturing benefit
Whereas IPOs of photo voltaic PV producers are doing nicely, inexperienced power EPC and IPP should not in a position to excite traders. Behind this stark distinction are authorities initiatives.
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Authorities subsidies and help play an important function in making renewable power reasonably priced. Regardless of the falling value of wind and photo voltaic, they’re nonetheless costlier than thermal. Therefore, any enhance in authorities subsidies boosts investments in inexperienced power.
At current, subsidies are skewed in the direction of manufacturing which is driving their earnings. The photo voltaic PV module producers – Premier, Waaree, and Alpex – are beneficiaries of Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM Scheme) and PM Surya Ghar: Muft Bijli Yojana introduced in February 2024. Their order books, income, and earnings are breaking data as retail orders have quicker execution.
Premier Energies reported a 140% year-over-year leap in income and a 490% leap in consolidated web revenue in Q3 FY25. It even secured a Rs 1,234 crore order for photo voltaic PV modules. Equally, Waaree’s Q3 FY25 income and revenue after tax elevated by 116.6% and 260% YoY, respectively. It’s utilizing the IPO proceeds to construct new factories to satisfy the rising demand.
So as to add the cherry on high, the Nationwide Manufacturing Mission launched within the Union Price range 2025 will help industries within the manufacturing of photo voltaic PV cells, electrolysers, wind generators, high-voltage transmission tools, and grid-scale batteries.
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IPOs that received tepid response from traders
Nonetheless, the opposite facet of the renewable provide chain continues to be struggling. EPC and Operations & Upkeep (O&M) service suppliers construct and preserve photo voltaic and wind tasks. The acquisition of land is a problem that causes delays in challenge commissioning. Therefore, many EPC and O&M service suppliers have vital working capital necessities and large debt.
That explains traders’ tepid response to NTPC Inexperienced Power and Solarium Inexperienced Power. NTPC Inexperienced Power has a big land financial institution. Its whole earnings rose 15.5% to Rs 531.2 crore, and revenue after tax surged 52.5% YoY to Rs 89.42 crore.
It’s secure to imagine that it isn’t the traders’ urge for food for inexperienced power that has lowered however traders are simply not enthusiastic about EPC and IPP IPOs.
Can the ISTS waiver change the course for EPC and IPP gamers?
To encourage giant scale photo voltaic and wind tasks, the Ministry of Energy provided a 100% waiver on Inter-State Transmission Costs (ISTS) for 25 years on tasks commissioned on or earlier than 30 June 2025. After this era, the waiver will likely be phased out to 75% for the following yr, 50% the yr after it, and 25% after.
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This ISTS waiver boosted funding in renewable power and EPC service suppliers noticed a surge in tasks. This inspired EPC service suppliers like Solarium Inexperienced Power to take the IPO route to satisfy working capital wants and repay a portion of their debt. Quicker commissioning of energy tasks may help increase EPC earnings which would require coverage help.
Nonetheless, boosting renewable power manufacturing alone can’t assist India obtain the five hundred GW goal by 2030. This power also needs to be accessible to shoppers.
Subsequent in line: Energy transmission tasks
In India, there’s a lack of parity within the renewable power potential of the states. States that produce extra renewable power do not need enough battery storage or grid infrastructure for inter-state switch, which makes renewable power tasks unfeasible.
The subsequent step is to spice up investments in battery storage and grid infrastructure to facilitate seamless transmission of extra capability from RE-surplus states to RE-deprived states. Nonetheless, transmission tasks have to choose up tempo as they take 3-4 years to construct whereas renewable power tasks take simply 12 to 24 months to develop.
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As renewable era is going on at a quicker price than transmission, renewable power producers are unable to promote the excess, which is limiting their era potential.
Authorities initiatives to spice up energy transmission
The federal government is accelerating help in the direction of battery storage and transmission capability by selling home manufacturing of high-voltage transmission tools and grid-scale batteries.
The federal government has allotted Rs 9.15 lakh crore in the direction of the Nationwide Electrical energy Plan 2023 to 2032 for Central and State Transmission Techniques. The plan goals to increase the transmission community from 4.85 lakh ckm in 2024 to six.48 lakh ckm in 2032. Beneath the plan. 9 Excessive Voltage Direct Present (HVDC) strains of 33.25 GW capability will likely be added.
The federal government’s inexperienced power initiatives could be summed up as follows:
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- First, scale up rooftop photo voltaic modules and cells to make them cost-effective even with out subsidies.
- Second, construct transmission tools and battery storage in India to scale back enter prices and streamline renewable power challenge execution with coverage help.
- Third, increase grid infrastructure to make utility-scale renewable power tasks possible.
Can the federal government’s inexperienced power efforts replicate the success of transport infrastructure?
The federal government’s accelerated investments, coverage help, and efforts to make inexperienced power an economically possible possibility may drive order books throughout the provision chain. Nonetheless, the massive query stays: can the ability infrastructure replicate the 2022-2024 success of transport infrastructure (roads and rails) within the 2025-2030 interval?
Because the 2030 deadline nears, momentum is choosing up, investments are pouring in, and order books are filling up. The inexperienced power house is getting crowded with IPOs.
Traders ought to tread with warning and take a look at price-to-earnings (PE) ratio and debt earlier than investing in these IPOs. Waaree and Premier Energies have already dipped beneath the itemizing worth as a consequence of their stretched valuations.
Even after correcting 26.6% yr up to now to Rs 2,099, Waaree Energies inventory trades at a PE ratio of 61.6x, a lot above the IPO worth (Rs 1,550) PE ratio of 31.28x. As for Premier Energies, the inventory trades at 188x PE even after a 27.5% correction share worth in 2025 to Rs 966. This ratio is method above the IPO worth (Rs 450) valuation of 64.93x.
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Summing up
Renewable power tasks – be it era, storage, or transmission – are capital-intensive and susceptible to delays. They rely closely on authorities incentives and insurance policies for his or her feasibility.
Whereas it’s too early to gauge the expansion potential of renewable power IPOs, they’re value including to the watch record to see how India’s inexperienced power story unfolds.
A risk-averse technique might be so as to add established gamers like Suzlon Power and JSW Power to your watchlist. These corporations have a sound stability sheet and a robust execution file.
Word: Now we have relied on information from http://www.Screener.in all through this text. Solely in circumstances the place the information was not accessible, have we used an alternate however extensively used and accepted supply of knowledge.
Puja Tayal is a monetary author with over 17 years of expertise within the subject of basic analysis.
Disclosure: The author and his dependents do maintain the shares mentioned on this article.
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