According to the International Energy Agency's World Energy Outlook 2021, India currently accounts for 6.1% of global primary energy consumption. This share is expected to rise to about 9.8% by 2050, reflecting the country’s increasing energy demands. With India as the third-largest energy consumer globally, the energy sector here is expanding rapidly.
Energy Industry in India - A Brief Overview
India is the world’s third-largest producer of electricity, boasting an installed power capacity of 417 GW. More than 80% of India's energy comes from three main sources: coal, oil, and solid biomass. Coal has been crucial for growing electricity generation and industrial activities, and it continues to be the biggest part of the country's energy supply. Driven by a growing population, industrial expansion, urban development, and supportive government policies, India has transformed from an energy-deficient nation to one with an energy surplus.
Programs such as the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA), Unnat Jyoti by Affordable LEDs for All (UJALA), and Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) have been pivotal in this transformation. These initiatives have enhanced electricity access, advanced rural electrification, and promoted energy efficiency nationwide.
Unlisted Energy Stocks in India
Unlisted stocks refer to shares of companies that aren’t traded on public stock exchanges. These companies may be in various stages of growth, from startups developing cutting-edge renewable technologies to established players in the oil and gas sector that have chosen to remain private. Here are a few of the unlisted energies stocks in the unlisted market.
Waaree Energies Unlisted Share
Founded in 1989, Waaree Energies is India's largest solar manufacturer and exporter, boasting an aggregate installed capacity of 12 GW as of June 30, 2023. Headquartered in Mumbai, the company is a flagship of the Waaree Group and holds 40 global certifications, underscoring its worldwide bankability and competitive edge. Originally specializing in pressure gauges and valves, Waaree Energies transitioned to solar equipment in 2007 and became a global leader outside China, maintaining Bloomberg Tier-1 status for over 35 consecutive quarters.
Snapshot of fundamentals of Waaree Energie’s unlisted share
Waaree Energies is making waves in the industry with an order book of Rs 43,112.9 Cr for FY 2022-23 and a remarkable 51.21% revenue growth over the last three years. The company employs over 7,800 people and runs four cutting-edge plants in Gujarat. It holds a solid CARE A-; Stable rating for its long-term bank facilities and is gearing up to reduce its reliance on China for sourcing by FY 2023-24. Waaree has already powered over 10,000 households and boasts a strong market presence with over 300 franchises and 1,400+ retail points across India. Globally, it operates in 20 countries and earned Rs 4,616.53 Cr from exports in FY 2023.
Vikram Solar
Vikram Solar is a major player in the solar industry, with a production capacity of 3.5 GW. Founded in 2005, the company operates factories in Falta SEZ, Kolkata, and Oragadam, Chennai. Vikram Solar has achieved notable milestones, including a 100 kW floating solar PV plant and the full solarization of Cochin International Airport. They provide a complete range of solar solutions, including engineering, procurement, construction, and maintenance services.
Vikram Solar operates in 32 countries and has a proven track record with 1,420 MW of EPC projects completed globally. The company has also serviced over 900 MW of high-efficiency modules. Their solar modules are exported to more than 16 countries, highlighting their extensive international reach and expertise.
Snapshot of fundamentals of Vikram Solar unlisted share
Vikram Solar's total assets grew from ₹2,237.23 Cr in FY22 to ₹2,476.29 Cr in FY23, largely due to increases in current investments, capital work in progress, and property, plant, and equipment (PPE). The company's net worth also saw a 3.96% rise in FY23, driven by an increase in other equity. Despite this, cash flow from operating activities dipped by 2.94% to ₹195.43 Cr, mainly because of reduced provisions and other financial liabilities. However, PAT saw a remarkable increase of 123.02%, reaching ₹14.49 Cr, a notable recovery from the previous year's loss of ₹62.94 Cr, driven by increased operational revenue. In terms of revenue, it grew by 19.82%, rising to ₹2,073.23 Cr in FY23 from ₹1,730.31 Cr the prior year.
Nayara energy
Nayara Energy's refinery, which began commercial production on May 1, 2008, has evolved into India's second-largest single-location refinery. Located in Dwarka, Gujarat, the refinery has an impressive annual capacity of 20 million metric tonnes (MMT) or 405,000 barrels per day (bpd), contributing 8% to the nation’s total refining output. As a cutting-edge downstream and petrochemical company with a global presence, Nayara Energy operates this state-of-the-art facility, renowned as one of the most advanced and complex refineries in the world.
Snapshot of fundamentals of Nayara energy unlisted share
Nayara Energy's PAT increased by 923.47%, reaching ₹9,426.20 Cr in FY 2022-23, primarily due to a substantial rise in revenue. Current liabilities decreased from ₹29,580.50 Cr in FY22 to ₹25,983.60 Cr in FY23, mainly due to the repayment of borrowings and lease payments during the year. The company’s net worth expanded by 41.08% in FY23, reflecting enhanced profitability. Revenue from operations grew by 15.39%, amounting to ₹1,38,112.50 Cr in FY23, compared to ₹1,19,690.20 Cr in the previous year.
Apollo Green energy
Established in 1994, Apollo Green Energy, formerly Apollo International Limited, is a distinguished member of the Apollo Group. The company has quickly become a global leader, with operations spanning over 45 countries. Apollo Green Energy operates through several key business segments: Apollo Green Energy, which focuses on sustainable energy solutions; Apollo Prox, specializing in proximity services and innovations; Apollo Supply Chain, which manages logistics and supply chain operations; Apollo Fashion, offering a diverse range of fashion and apparel products; and Apollo Marketplace, providing a versatile platform for commercial transactions.
Snapshot of fundamentals of Apollo Green energy unlisted share
In 2023, the company experienced a 7.03% decline in revenue, totaling ₹753.40 crore, and a 7.22% decrease in total income, which amounted to ₹790.84 crore. Expenses were reduced by 11.46% to ₹765.19 crore. Cash equivalents fell by 4.39% to ₹69.20 crore, while receivables slightly decreased by 0.49% to ₹208.72 crore, and payables increased by 0.43% to ₹139.34 crore. Inventories grew by 15.71% to ₹42.71 crore. Additionally, the company significantly reduced its total debt by 44.13%, bringing it down to ₹340.43 crores.
Key Considerations for Investing in Energy Stocks in India
Financial Performance: The financial health of a solar energy company is crucial, including its revenue margins, profitability, and cash flow. Analyzing these metrics provides insight into the company’s overall stability and potential for growth.
Global Economic Factors: Global economic trends can affect solar energy stocks, especially if there are disruptions in the supply chain that impact the availability of raw materials and components needed for solar energy products.
Competitive Advantage: The growing demand for solar power, driven by its cost benefits, intensifies market competition. Identifying solar stocks with a sustainable competitive edge can help in understanding their potential to thrive in a competitive market.
Government Policies: Government policies and incentives in India significantly impact the solar energy sector. Keeping track of these regulations can offer valuable insights into the industry’s future direction and opportunities.
Before investing in solar energy stocks, it’s important to be aware of the challenges the solar industry faces. Despite its promise as an alternative energy source, solar development in India faces several obstacles. These include limited research and development infrastructure, which leads to a dependence on imports and higher costs.
Is Investing in Energy Stocks a Good Choice?
Solar systems also require a substantial initial investment and have long payback periods, which can be off-putting for some investors. Additionally, a lack of awareness, particularly in rural areas, slows down widespread adoption. Issues such as land acquisition and delays in government approvals further complicate solar plant development. Concerns about limited warranty support from implementation partners also present challenges.
Considering these factors is essential when evaluating investment opportunities in solar energy stocks.
Conclusion:
Investing in energy stocks offers potential but comes with challenges, such as high initial costs, long payback periods, and industry-specific obstacles. Careful evaluation of financial performance, global trends, competitive advantage, and government policies is essential to make informed decisions.
Disclaimer: This information is for private use only and does not constitute investment advice. Recipients must assess risks and seek advice from financial, legal, and tax professionals. Private market investments carry risks, and there are no returns or capital protection guarantees. We are not liable for investment decisions.
