Adani Green, the country's leading solar power developer, presents an exciting opportunity for investors seeking exposure to the booming renewable sector. The stock has given 3468.56% Returns over the last 5 Years. The article explores why this company stands out as an attractive choice for eco-conscious investors looking for both profit and purpose.
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Adani Green Energy (Adani Green) commenced operations in 2015, and in a short span of around seven years, it has created a substantial renewable energy footprint across India (Adani Green, 2022). With the commissioning of 2,000 MW of solar power at the massive Khavda solar park in Gujarat, Adani Green Energy Ltd. became the first firm in India to have over 10,000 MW of renewable energy capacity. The company now has the largest operating portfolio in India, with 10,934 MW. At present, Adani Green stock price is Rs. 1800+.
The company has set an ambitious target of achieving a renewable power generation capacity of 25 GW by 2025 and adding another 15 GW annually.
Financially, Adani Green has posted consistent growth since it started operations. In the financial year 2023-24, its total income grew to Rs. 12927 crores compared to the previous year’s Rs. 8409 crores.
The addition of new renewable energy capacities drove this. Its earnings before interest, taxes, depreciation, amortization, or EBITDA grew to Rs. 1131 Cr. from 637 crores. Additionally, the company has a strong balance sheet with a net debt-to-equity ratio of 3.11 as of March 2024. The company has consistently reduced this ratio, showing its commitment to improving capital efficiency over time.
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A big positive for Adani Green and the entire renewable energy sector in India is the strong support provided by the government. India has committed to generating 50% of its total energy requirements from non-fossil fuel sources by 2030 under its Nationally Determined Contribution (NDC) goals.
To achieve this, the government has rolled out attractive policies and initiatives like competitive bidding for large-scale projects and waiver of inter-state transmission charges for wind and solar projects established before 2025.
A major catalyst for Adani Green stock will be its recent inclusion into the Nifty Next 50 index. This exposes it to a wider class of institutional investors tracking this index. The company enjoys several competitive advantages, like integrated infrastructure capabilities across the renewable energy value chain.
Adani Green stock has its solar panel manufacturing unit and undertakes in-house EPC (Engineering, Procurement, and Construction) activities for its renewable energy projects. Its long-term power purchase agreements with central and state governments to build 750 megawatt (Mw) solar power projects in Rajasthan and Gujarat provide revenue visibility.
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After listing in June 2018, Adani Green share price at Rs.30/share, Adani Green stock had a range bound for the first three years. However, in the last year, things have changed dramatically. The stock rallied from levels of Rs. 600 in June 2021 to hit a lifetime high of Rs. 2173.65 in October 2022, witnessing a stellar 460% return in a short time.
This rally has been led by quarterly solid results supported by capacity additions, increased investor interest in ESG stocks, and the recent inclusion into the Nifty Next 50 index.
With India's determination to transition swiftly towards a greener energy mix and companies like Adani Green at the forefront of developing renewable resources, the long-term outlook for investment in this space is decidedly positive. A focus on large utility-scale projects, a strong execution track record, and assured revenues through long-term PPAs mitigate risks for Adani Green.
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