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Adani green energy limited: is it a good stock to buy?

 

By Daniel Asikpo Feb 14, 2024

 

The stock market can be a surprising one when business moves either in the red or green direction. We saw how Adani green energy price showed bullish intentions last week as its share price grew by over 16%, hitting a new 52-week high. With the market full of speculations, the rumors was a possible business Adani were expected to go into with foreign banks with a US firm also being linked in the process.

 

Adani Green Energy

 

At Glance

 

● Adani green energy Ltd has a large market cap of over Rs 291, 800 Crores. 

 

● Adani green energy Ltd saw a 16.56% Returns on equity showing an outperformance of its 5 year average of 12.33%. 

 

● Adani green energy total revenue has been on a continuous appreciation from 2020 to 2023 being the last recorded.

 

● This company continues to show strides of improvement with an expected funding of $75 billion by 2030, aiming to meet up to 45 GW capacity.

 

 

The Indian renewable energy company is one of the financial behemoths in the financial systems of the country, boasting to be its largest leading renewable energy, with a large market cap of over Rs 291, 800 Crores. Since the incorporation of AGEL into the Adani group in 2015, we have seen positive business in this sector. Power seems to be very crucial when it comes to running appliances and being up to date in the modernized world. 

 

Green energy has always been seen as the best way to keep the environment safe for habitation. Adani Green Energy Limited (AGEL) over the years has been in the business of building and developing solar power, wind power and several other projects to promote renewable energy in India. 

 

Adani group revenue track since 2020

 

Adani green energy total revenue has been on a continuous market appreciation from 2020 to 2023 being the last recorded. We are already seeing spikes of another market increase with new records seeming inevitable. There has been a positive track record of Rs 2548.63 (2020), 3124.00 (2021), 5133.00 (2022) and 7792.00 in  2023. 

 

This is due to the high demand of renewable energy in India. As of 2023, India stood at the fourth position in renewable energy capacity and 5th in solar power capacity when taking a global ranking. Adani green energy Ltd saw a 16.56% Returns on Equity showing an out performance of its 5 years average of 12.33%. 

 

How healthy is AGEL for investing? 

 

According to various research, market specialists expect Adani green Energy to increase by over 20% every year. We saw this happen between 2020 and 2021 in the total revenue change. The 2022 difference from 2022 saw an increase of almost 70% in market spike. The last recorded in 2023 was another success with an increase difference of a little above 51%. 

 

Nevertheless, there have been statements of the company being politically backed by the government which could change direction in case the government should also change. The PE of the stock to some investors seems to be moving way too fast showing qualities of an overvalued stock. 

 

Their financial report of 2023 was very encouraging looking at how a lot of their power sector surged. There was an operational capacity increase of 49% when comparing Q4 of FY23 with Q4 of FY22. There was also an increase of energy sales of 56% within that same quarter comparison. FY 23 against FY22 in annual energy sales saw an overall increase by 58%. The financial performance was in the process not lacking behind, when also omparing Q4 of FY23 and Q4 of FY22, there was an 89% increase in revenue from power supply with an annual change of 54% increase. This company continues to show strides of improvement with an expected funding of $75 billion by 2030. The aim is to meet up with up to 45 GW energy capacity in this sector.

 

Competitive Landscape of Adani green energy

 

In the green energy sector, Adani green energy stands to be a strong and reliable source in India. Being part of Adani group, one of the financial powerhouse businesses in India and the world at large, it is quite easy to say the competitive advantage falls to their favor. They remain one of the leading and largest sources to the country in this sector, selling power on a long term PPA (Power Purchase Agreement) and also to intending Merchants. 

 

It has its power stations across many states of the country, spreading tentacles through solar, wind and hybrid sectors. A December 2023 report showed that the company ranks amongst the top 3 Solar PV developers, proving to be the only player from the Asian continent in terms of global large-scale PV developer ranking. The company was accredited to generate a total solar capacity of over 18 GW, an impressive performance which shows its massive contribution to the world's renewable energy landscape. 

 

They were deprived from being the top producer in this sector by Totalenergies, a France base leading producer with the capacity of over 41 GW. As earlier stated, the $75 billion dollar funding will help surpass the current leaders if their energy production remains the same in the next six years. With lots of awarded contracts and other expected inflow from this sector, the Indian renewable energy giants will continue to make positive strides in boosting the GDP of India's economy. 

 

Challenges of Adani green Energy

 

Being part of the Adani group, early accusations of stock data manipulation and money laundering saw some setbacks to the company's financial pursuit. Undoubtedly, these acts did scare potential investors who wouldn't want to see their investment dashed to the ground in the process. The allegations by Hinderburg Research stumbled on the Indian markets, prompting a market decline of all Adani group shares. Billions were lost by these financial giants in the process.

 

The recent verdict that took place on 3rd January 2024 saw the supreme court turning down all possible allegations against Adani group. Indeed shares of Adani companies did soar in the process. Nevertheless, there needs to be a close monitoring should such a case be revisited. The future of Adani may be bright but lots of corrections must be made to avoid investor's turn down at crucial times. As the renewable energy sector continues to grow, Adani green energy, India and the Asian continent hope to be well heard.

 

Business has gradually returned to winning ways for Adani green energy limited (AGEL) after setbacks early last year. With the current achievement at second position in the world renewable energy sector bundled with the expected funding ahead of 2030, there are possible green flags that these shares may continue in the green candles. Competition, social, natural and economic factors all being inclusive, there is always a need to go through the needed financial research before venturing into investing.

 

 

 

 
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