Stocks of renewable energy companies are on an upswing, driven by investor interest, restructuring and the government’s push for green energy.
Inox Wind listed with a 23 per cent premium to its issue price of Rs 325 on the Bombay Stock Exchange last week. It closed at Rs 479 on Friday. The share price of Suzlon Energy, too, was up 7 per cent in a month following a rating upgrade by brokerages.
“The investment by Dilip Shanghvi and associates in Suzlon, the investor response to the Inox Wind listing and Sembcorp's purchase of IDFC-backed independent power producer Green Infra indicate investors are looking at renewables positively. Investor preference is for companies with a growth model, technology and proven business record,” said Rupesh Agarwal, vice-president, Ernst & Young.
HDFC Securities and Nomura have assigned a buy rating for Suzlon, which underwent a restructuring and received an equity infusion of Rs 1,800 crore from the Shanghvi family earlier this year. In its research report, Nomura said the company was poised for a turnaround after cleaning up its balance sheet and with a renewed focus on the Indian market.
Research analysts have been bullish on Inox Wind because of its strong promoter backing and long-term order book visibility.
While Inox Wind and Suzlon manufacture wind turbines, ABB has a significant market share in the solar inverter business. ABB also manufactures wind generators, an important component in turbines. Bharat Heavy Electrical Limited is setting up a photovoltaic cell manufacturing facility in Maharashtra with help of subsidy from the Centre.
Stock prices of solar energy companies like cell and module manufacturers Indosolar and Websol have jumped over the last year. Indosolar’s stock price (Rs 18) is up nearly nine times and Websol's stock price (Rs 23.50) is up nearly three times in a year.
“Companies in the solar component manufacturing business have been under pressure and face stiff competition from Chinese firms. This sector is now looking attractive for investors with the government hiking its renewable energy targets. We feel companies engaged in engineering, procurement and construction of solar plants will have good prospects,” said Sanjeev Zarbade, vice-president at equity research firm Kotak Securities.