Stock analysis: With over 150% rise in the past year, should Adani Green Energy be part of your portfolio now?

On Monday Adani Green Energy entered the list of top-10 valued firms as its market valuation zoomed over Rs. 4.22 lakh crore.

Adani Green Energy was incorporated on 23 January 2015 as a subsidiary of Adani Enterprises Limited (AEL) with an objective of dealing in any kind of power or electrical energy using coal, lignite, petroleum products or any other substances, wind energy, solar energy, renewable energy, wave energy, tidal energy, hydro energy, thermal energy.

During the initial days of existence, AGEL and Inox Wind together established a 20 MW capacity wind power project in Lahori, Madhya Pradesh.

In 2017, the company took complete control of the overall solar energy portfolio of Adani Enterprises and got itself listed on the National Stock Exchange of India and Bombay Stock Exchange.

The company operates the Kamuthi Solar Power Project, one of the largest single-location solar power project in the world.

Product Portfolio

With a portfolio of 13,990 MW of installed capacity and secured PPAs of 20,284 MW, Adani Green Energy Limited (AGEL), part of the Adani group, is one of the largest renewable energy companies in India. 

The electricity generated is supplied to sovereign and sub-sovereign promoted entities on the back of 25-year long-term Power Purchase Agreements (PPAs). The portfolio consists of 54 operational projects and 12 projects under construction, says Ventura Securities in a research report.

The portfolio is almost equally split capacity wise between central and state government schemes.

The company is present across 11 Indian states, Gujarat, Punjab, Rajasthan, Maharashtra, Karnataka, Tamilnadu, Andhra Pradesh, Telangana, Chhattisgarh, Madhya Pradesh and Uttar Pradesh with a portfolio of 36 operational projects and 3 under-construction projects.

The company had 15 (direct and indirect) subsidiaries and 1 joint venture as of 31 March 2018.

Opportunity

Currently, 70 per cent of India's electricity is generated by burning coal. However, India is looking forward to producing more energy than what is currently generated from the entire power grid.

According to some media reports, the country plans to produce 450 gigawatts of power through solar power and other renewable energy sources by 2030.

India is running the world’s largest clean energy programme to achieve 175 GW of renewable capacity, including 100GW of solar power by 2022.

Deals

In October 2021 Adani Green Energy completed the $3.5-billion acquisition of SB Energy India, which was an 80:20 joint venture between Japan’s SoftBank Group and India’s Bharti Group. The transaction marks the largest acquisition in the renewable energy sector in India.

In December 2021, Adani Green Energy signed, what the company claims is, the world’s largest evergreen power purchase agreement with the Solar Energy Corporation of India to supply 4,667 MW of green power.

Abu Dhabi-based conglomerate International Holding Company PJSC (IHC) has announced the investment of $2 billion as primary capital in three Adani portfolio companies – Adani Green Energy Ltd (AGEL), Adani Transmission Ltd (ATL) and Adani Enterprises Ltd (AEL) – through preferential allotment route. Accordingly, AEL will get an investment of ₹7,700 crore and AGEL and ATL will get ₹3,850 crore each.

Financials

Adani Green Energy reported a 13.9 per cent rise in consolidated net profit of ₹49 crore in the quarter ending 31 December 2021. The company had posted a net profit of ₹43 crore in the year-ago period.

Its consolidated total income jumped 74 per cent to ₹1,471 crore versus ₹843 crore a year ago.

The company reported total operational capacity increased by 56 per cent year-on-year to 5,410 MW while the sale of energy increased by 84 per cent year-on-year at 29.71 crore units in Q4 FY22.

Adani Green’s solar portfolio capacity utilisation factor stood at 26.4 per cent with a 210-basis points improvement year-on-year backed by approximately 100 per cent plant availability.

The wind portfolio capacity utilisation factor of the company stood at 23.6 per cent with 140 basis points improvement year-on-year backed by approximately 98 per cent plant availability.

AGEL became the first Indian renewable energy developer to issue a 20-year amortizing project finance type structure - the USD Green Bond of USD 362.5 mn. This provides foreign investors an opportunity to participate in the Indian renewable energy space via investment-grade bonds.

Stock performance

Adani Green shares are one of the multi-bagger stocks in 2022. Adani Green Energy's share price soared 9.3 per cent to ₹2,951.90 a piece on BSE, hitting a fresh 52-week high, on Tuesday.

The stock price has risen 28 per cent in the last five days, and 55 per cent in the last one month. While it has surged 154 per cent in the past one year as compared to 22 percent rise in the S&P BSE Sensex, Moreover, in the past 3 years, It has rallied 7574 percent.

Future Plans

Adani plans to invest $70 billion in the next 10 years across renewable energy generation, component manufacturing, transmission, and distribution.

“By 2030, we expect to be the world’s largest renewable energy company without any caveat and we have committed $70 billion over the next decade to make this happen. There is no other company that has yet made so large a bet on developing its sustainability infrastructure,” Gautam Adani said during a Bloomberg event in November 2021.

Adani Group, meanwhile, aims to triple the share of renewable power generation capacity in its total portfolio to 63% from the present 21%. It wants to make Adani Ports a net-zero carbon emitter by 2025 and power all data centres with renewable energy by 2030. It has also said that it will spend 75% of its planned capital expenditure until 2025 on green technologies.

Disclaimer: This article is for educational purposes only. Please speak to your financial advisor before making a financial decision.