Category: Personal Finance

Tata Power

Tata Power Limited, a subsidiary of the Tata Group, is an Indian electric utility company situated in Mumbai, Maharashtra. The company’s main activity is to generate, transfer, and distribute electricity. Tata Power has established TP Akkalkot Renewable Ltd, a special purpose vehicle (SPV) that will be responsible for the building, operation, and maintenance of this captive solar power plant.

The company’s debt has been reduced by 16.04 crores. The firm has a high level of operating leverage, with average operating leverage of 4.13. With a current ratio of 3.56, the company has a strong liquidity position. Tata Power’s current year dividend is Rs 1.55, with a yield of 1.25 percent.

Tata Solar has embarked on a rooftop solar installation binge. It is also one of India’s largest and oldest solar panel manufacturing plants, given the courtesy.

Suzlon

Suzlon is a leading renewable energy company in India. Wind turbine generators are designed, developed, and manufactured by the corporation (WTGs). It is a company that creates, develops, and manufactures wind turbine generators (WTGs). It also offers ancillary services, giving it a significant presence throughout the wind energy value chain.

The company has a high level of operating leverage, with an average operating leverage of 56.32 percent. Suzlon Energy has a PE ratio of -17.67, which is low and inexpensive compared to its peers. Suzlon Energy has a D/E ratio of -1.16, indicating that the company has a low debt-to-capital ratio. Over the last three years, the company has had a dismal ROE of 6.77 percent. In the past year, the stock has given a return of 68%.

Adani Power

Adani Power Limited is the power division of the Adani Group, an Indian conglomerate headquartered in Ahmedabad, Gujarat. Adani Power has a D/E ratio of 1.90, indicating that the company has a low debt-to-capital ratio. Adani Power’s operating margin for the current financial year is 8.74 percent. The current ratio of Adani Power is 0.15.

The green energy investments sparked value purchasing and partial payments to the Rajasthan and Maharashtra governments that had been long overdue. Aside from that, the cancellation of Adani Power’s delisting has aided the company’s share price surge. In the past year, the stock has given a fantastic return of 202% and YTD returns of 113%.

Top 4 Indian Solar Company Stocks To Watch Out

Websol Energy System

In India, it is a significant manufacturer of solar cells and panels. The company has a reputation for high-quality products ranging from 5 W to 220 W, catering to the demands of home, commercial, and industrial institutions, and has been in business for more than two decades.

Websol Energy System has a market capitalization of Rs 221.12 crore. The company generated gross sales of Rs. 1955.42 crores and total income of Rs.2064.41 crores in the most recent quarter. It has a PE ratio of 3.26, which is low and cheap compared to its peers. The stock gained 57.4 percent over three years, compared to 39.97 percent for the Nifty Smallcap 100. The D/E ratio of Websol Energy System is 0.61, indicating that the company has a low debt-to-capital ratio. Given its development and performance, Websol Energy System’s revenue climbed by 185.22 percent, which is respectable.

Swelect Energy Systems

Swelect Energy Systems Limited is a solar module, mounting structure, transformer, and inverter manufacturer and trader based in India, Europe, and internationally. Solar and Solar Related Activities, Foundry Business, and others are the company’s three segments.

Swelect Energy’s PE ratio is 16.52, which is excessive and overvalued in comparison. Swelect Energy has a negative return on investment (ROI) of -1.89 percent, which is a bad omen for future performance. (higher values are always desirable). The current year dividend for Swelect Energy is Rs 2 and the yield is 1.12 %.

Numeric Power Systems Limited was the company’s previous name until May 2012, when it was renamed Swelect Energy Systems Limited. Swelect Energy Systems Limited is based in Chennai, India, and was founded in 1994.

The current share price of Swelect Energy Systems is 260.25. It currently has a market capitalization of Rs 402.01 crore. The company reported gross sales of Rs. 1420.4 crores and total income of Rs. 1737.5 crores in the most recent quarter.

Surana Solar

In comparison to the Nifty Smallcap 100, which returned 48.85 percent over three years, the stock returned 59.04 percent. Surana Solar Ltd. was founded in 2006 and is based in India. The current share price is 13.64. It now has a market capitalization of Rs 64.61 crore.

The company’s debt has been reduced by 16.04 crores. The firm has a high level of operating leverage, with average operating leverage of 4.13. With a current ratio of 3.56, the company has a strong liquidity position.

Urja Global

Urja Global Ltd. was founded in 1992 and is based in the United Kingdom. The current share price is Rs. 7.55. It now has a market capitalization of Rs 422.36 crore. The company reported gross sales of Rs. 1445.59 crores and a total income of Rs.1463.63 crores in the most recent quarter. The stock returned 149.18 percent over three years, compared to 48.85 percent for the Nifty Smallcap 100. A greater current ratio is desirable so that the corporation can withstand unanticipated business and economic downturns. The current ratio of Urja Global is 1.09. The organization can take advantage of India’s rural development wave of opportunity and optimism surrounding solar energy.

Highlights of Renewable Energy

• India has the world’s fifth-largest installed renewable energy capacity.
• India’s Wind power has the fourth greatest installed capacity in the world.
• In the last five years, solar power capacity has expanded by more than 5 times, from 6.7 GW to 40 GW in March 2021.
• By 2030, the Indian government wants to boost overall renewable energy capacity to 450 GW. Gujarat is now constructing the world’s largest renewable energy park, a 30 GW solar-wind hybrid project.
• India has the world’s fifth-largest solar installed capacity.
• ReNew Power, Vikram Solar, Indosolar, Waaree Solar are some of the popular non-listed solar companies.

Solid dividend yields, make the stock of Coal India attractive

Last year, for 2020-21, Coal India declared a dividend of Rs 12.5 per share. The company declared a dividend of Rs 7.5 per share in November 2020 and again a dividend of Rs 5 per share in the month of Feb 2021, taking the total to Rs 12.5 per share. If you buy the shares at Rs 145 and assume the company continues to pay the same dividend, your dividend yield on the stock works to around 8.61%, which is pretty good.

In the previous year 2019-20 also the dividend was almost the same at Rs 12 per share. It is unlikely that the company would reduce its dividend in the years to come, which means that your yield is much better than bank deposits. State Bank of India deposits are fetching an interest rate of 5.5% only.

The company is the world’s biggest coal mining company, which is also cash rich and debt free. It is unlikely at least there are any threats to the business. Also, with the government facing a huge shortfall in revenues, Coal India maybe forced to pay a higher dividend this financial year.

Who you should buy the stock of Coal India?

Last month, brokerage firm Motilal Oswal said to buy the stock with a price target of Rs 185, which is almost 25% higher from the current levels. ICICI Direct in a recent report last week said that for Q1FY22E, coal offtake was at 160 million tonne (MT), up 33% YoY but down 3% QoQ.

“We expect consolidated topline to increase 37% YoY but decline 5% QoQ to Rs 25,295 crore. The consolidated EBITDA margin is likely to come in at 22.5% (vs. 23.9% in Q4FY21 and 16.5% in Q1FY21). We expect EBITDA/tonne to come in at Rs 355/tonne (compared to Rs 387/tonne in Q4FY21 and Rs 253/tonne in Q1FY21),” the brokerage has said.

Many brokerages remain optimistic on the stock and have a “buy” rating, thanks to the dividend yield. We believe that the downside risk to the stock remain limited given its superior dividend yields, debt free status and robust cash flows.

“At 3.2 times FY22E EV/EBITDA and 6 times FY22E P/E, Coal India remains attractively valued and implies a PV of just 10 years of future cash flows. We maintain our Buy rating on COAL with a target price of Rs 185 per share, based on 4x FY22E EV/EBITDA,” brokerage firm Motilal Oswal said in its last report on Coal India in June.

Disclaimer

Investing in stocks is risky and investors need to be cautious. Neither Greynium Information Technologies nor the author, nor the brokerage houses mentioned would be responsible for any losses incurred based on decisions made from the article. Investors are also advised caution as the markets are now at a historic high.

About the author

Sunil Fernandes the author of the article has spent 27 years covering stocks markets and mutual funds. He is the Managing Editor of Goodreturns.in and has worked with Hindustan Times, Deccan Herald, Oman Economic Review, Dalal Street Investment Journal and Gulf Times.

Shares of government owned, Bharat Petroleum Corporation Ltd (BPCL) is available at a solid dividend, with the company recently announcing a hefty dividend of Rs 58 per share.
The final dividend would be paid within 30 days from the date of its declaration at the AGM, which is not yet announced.

If the investor would buy the stock now it is trading at Rs 448, and assume post the dividend it drops by Rs 58, the stock should go to Rs 390, which should be very attractive given significantly higher targets by brokerage firms in the past few months.

Earlier, ICICI Direct had a “buy” call on the stock of BPCL, which it had anticipated could reach a price target of Rs 495 per share. If you include the cost of acquisition (Rs 390, inclusive of dividend) than the price target of Rs 495, leaves ample room for appreciation in the stock.

According to an earlier report from ICICI Direct, marketing sales reached near normal level in Q4FY21, second wave of Covid-19 and subsequent movement restrictions led to reduction in fuel demand.

“This has affected capacity utilisation as well that reduced up to 86- 87% in May. Improvement in global product cracks and further recovery in fuel demand will be important for Bharat Petroleum Corporation Ltd’s profitability in the near term.
The progress on divestment, response by bidders and subsequent valuation ascertained to the company will be a key monitorable and will drive stock price. We roll over valuations to FY23E and maintain HOLD recommendation on the stock with a target price of Rs 495 based on average of P/BV multiple and price to earnings multiple at Rs 495 per share each,” the brokerage has said.

In a report Motilal Oswal also had upped the price target on the stock, citing faith in the privatization measures of the company. The company had placed a buy on the stock, in its last research report on BPCL.

“BPCL posted better-than-estimated profitability, driven by better marketing volumes and refining/marketing margin, further aided by inventory gains. The company made huge progress towards privatization in FY21, despite challenges posed by COVID-19, by streamlining its subsidiaries (divested its entire stake in NRL, consolidated its stake in BORL, merged BGRL with BPCL) and sold off its trust shares,” the brokerage said.

Why you should buy the stock ahead of privatization?

Many analysts believe that once the privatization move of BPCL is over, it could drive the stock of the company even higher.
Reports suggest that Vedanta is among the bidders for BPCL. There were also reports that the Union government is considering a proposal to allow up to 100 per cent foreign investment under the automatic route in oil and gas PSUs that have an ‘in-principle’ approval for disinvestment. This could be a big trigger for the stock. However, we cannot confirm whether it is speculation or such things could happen. But, all things put together the acquisition cost of Rs 390, makes the stock a good buy.

However, putting all things together and also from what brokerages are saying, if you get the stock of BPCL at Rs 390 per share, it would certainly be a good stocks to buy.

Disclaimer

Investing in stocks is risky and investors need to be cautious. Neither Greynium Information Technologies nor the author, nor the brokerage houses mentioned would be responsible for any losses incurred based on decisions made from the article. Investors are also advised caution as the markets have closed at an historic high.