Why 2024 is a Good Time to Invest in the Best Indian Solar Stocks

With rising stringent taxes on fossil fuels, the world has turned towards renewable sources of energy.

And one of the biggest benefactors of this shift is solar energy.

People are calling it the future. It's no longer just a fad, but the solar sector all over the world is booming.

After the consecration of the Ram idol in Ayodhya, Prime Minister Narendra Modi publicly announced a scheme to electrify one crore households with solar electricity.

According to estimates, there are less than 10 lakh households with rooftop solar installations at present... clearly, the opportunity is massive.

In the Union Budget 2022-23, the Indian government allocated Rs 195 billion (bn) for PLI scheme to boost manufacturing of high efficiency solar modules.

Investors are waiting with bated breath to see whether Finance Minister Nirmala Sitharaman announces yet another booster shot for the fast-growing sector.

By the end of the decade, the target for India's installed renewable energy capacity is expected to reach over 450 GW vs 166 GW in October 2022. Of this, over 60% is expected from solar.

Here's another recent example that might provide you a better context of the underlying opportunities for top listed solar players...

Last week, Australian Premium Solar shares made a stellar debut on the SME segment, listing at over 150% premium over its IPO price.

Rs 54 to Rs 140... all in one single session!

The company basically manufactures monocrystalline and polycrystalline solar panels and provides EPC services for residential, agricultural, and commercial applications.

The company's IPO saw massive response, with the issue getting subscribed 464 times.

Meanwhile, IREDA chairman Pradip Kumar Das said in a recent interview that having one crore of rooftop solarization which will be requiring around Rs 1.25-1.5 lakh crore of outlay.

It certainly seems like India's solar boom is at an inflection point.

Once the country's solar ecosystem becomes self-sustaining, the sky will be the limit for the listed companies.

In this article, we'll look at all the major solar players and their growth prospects.

Top Indian Companies Profiting from the Solar Boom

#1 Tata Power

Tata Power, a subsidiary of the Tata Group, has a wholly owned subsidiary called Tata Power Solar which specialises in solar energy services.

The company manufactures solar modules, solar cells, and other solar products, and provides EPC services for solar power projects.

The company's subsidiary recently bagged a Rs 4.2 billion (bn) order to supply 152 MWp solar PV modules for an NTPC project.

The company has also collaborated with SIDBI to support small and medium-sized enterprises in solar initiatives.

Note that the company's management has laid out a strong growth plan where it will incur a capex of over Rs 600 bn over the next three years.

Unlike earlier years, Tata Power is steering clear of new coal-based thermal power capacity and is instead focusing on renewables this time.

The company is funding its ambitious plans via external borrowings, making it one of the top 5 heavily indebted companies.

However, a large part of the company's total debt is long-term, due for re-payment only after 2-3 years.

This gives their clean energy projects time to come on stream and generate robust cash flows.

For more on Tata Power, watch Tanushree Banerjee's latest video:

#2 Waaree Renewables

Waaree Renewables Technologies is engaged in the business of power generation through renewable energy sources. It also provides consultancy services.

It's one of the largest vertically integrated new energy companies. It has India's largest solar panel manufacturing capacity at its plants in Chikhli, Surat, and Umbergaon in Gujarat.

In December 2023, the company signed an agreement with Australia's 5B Industries to produce solar products in India.

This collaboration will open avenues for the commercialisation of the innovative 5B Maverick solar product, allowing for localisation, scalable production, and competitive deployment in India to supply to both local and international developers as well as EPC companies.

Prior to that, the company had secured a letter of intent from a window solution company for the EPC work of a 4.27-megawatt solar power project on a turnkey basis.

In November 2023, Waaree Renewable secured a letter of award valued at Rs 1.8 bn for the execution of EPC work for a 70-megawatt direct current capacity solar power project.

Order on top of orders on top of orders... this has been the case for this major solar energy player.

During the third quarter ended December 2023, its solar engineering, procurement, and construction businesses saw revenue jump of over 400%.

The company's order book stood at more than 749 megawatts, while the management said that bidding pipeline remains robust.

The company is a key beneficiary of several policies such as the Solar Park Scheme, PM Kusum, Grid-Connected Solar Rooftop Schemes, among other initiatives.

Shares of Waaree Renewable have seen a steep spike in recent sessions owing to the solar rooftop announcement and the company's decision to split its equity shares.

#3 Borosil Renewables

Borosil Renewables is the first and only solar glass manufacturer in India.

The company spotted the opportunity in the segment quite early and commissioned its solar glass manufacturing facility in January 2010.

In the solar panel glass business, Borosil meets 40% of the domestic demand of 650 tonnes of glasses per day, while the rest is imported from China and Malaysia.

The company also exports almost 20% of its present solar panel glass capacity to Europe, with the primary focus being Germany, Spain, Portugal, Russia, and Turkey.

However, the company has faced a setback in the region lately as demand for solar glass in the European Union weakened due to competition from deeply discounted prices of modules imported from China and Southeast Asia.

For the September 2023 quarter, Borosil Renewables posted a minor net loss due to dumping of solar glass and the absence of import duties.

The company revenue was stable at Rs 5.2 bn for the first half of FY24.

Going forward, the company is expecting steady recover as its German subsidiary starts operating at full capacity and delivers larger size glass from the third quarter.

Borosil Renewables has invested Rs 5 bn to more than double its capacity.

It can now manufacture 1,000 tonnes of solar panel glass per day. It aiming to add another 1,100 tonnes per day capacity by the end of 2025.

The company is also looking to foray in the recycling business.

#4 IREDA

I know what you're thinking... how does an NBFC benefit from the solar boom in India?

IREDA's primary mission is to become a pioneering, participant friendly, and competitive institution for financing and promoting self-sustaining investment in energy generation from renewable sources.

Similar to how IRFC finances railway projects, IREDA especially focuses on the renewable energy segment.

As we mentioned earlier, the company's chairman is of the view that having one crore of rooftop solarization will require around Rs 1.25-1.5 lakh crore of outlay.

So IREDA is all set to get a boost as it funds more companies in the renewable segment.

The company has identified 7 strategic segments where it is likely to expand. This is in alignment with the government of India's focus. These key areas include:

• Green Hydrogen and Derivatives (Including Manufacturing)
• Pumped Hydro Storage Power Plants
• Battery Storage Value Chain (Including Manufacturing, Storage, Recycling)
• Offshore Wind
• Green Energy Corridor
• Rooftop Solar Power
• Green Mobility Value Chain (Fuel Cells, Charging Infrastructure)

Moreover, IREDA is also focused on optimising borrowing costs.

This in turn will enhance its competitiveness and profitability. To achieve non-linear growth, the company is streamlining its operating model.

Also, it is likely to have a focus on the environment and social management system.

With the government's target to achieve 500 GW non-fossil energy capacity by 2030 and achieve net zero carbon by 2070, IREDA has a lot of scope to grow in this space.

#5 Sterling & Wilson Renewable Energy

Sterling & Wilson Solar is a global end-to-end solar engineering, procurement, and construction (EPC) solutions provider.

The company provides EPC services primarily for utility-scale solar power projects with a focus on project design and engineering.

It also manages all aspects of project execution from conceptualising to commissioning and operations and maintenance (O&M) services.

It's currently expanding its renewable energy offerings to include EPC solutions for hybrid energy power plants, energy storage and waste to energy.

The company recently posted its earnings for the third quarter ended December 2023. Its net loss narrowed to Rs 623.9 million (m) on the back of higher revenues.

It raised Rs 15 bn in December 2023 to pare down debt and now looks all set for its next leg of growth.

The company's global CEO Amit Jain said that post the successful QIP, the company is fully geared to pursue the fast growing solar EPC markets in India and abroad.

During the quarter, its total order inflows went over Rs 24 bn. The unexecuted order book of the company stands at Rs 87.5 bn.

#6 Websol Energy

Websol Energy is a manufacturer of photovoltaic monocrystalline solar cells and modules in India.

The company went into business as a fully export-oriented unit catering to Europe (mainly Germany and Italy) and the US.

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.

Although the company's financials are all over the place with repeat losses for the past six quarter and two financial years, Websol's fortunes could change as it makes big strides in the solar segment.

The company has reduced its debt to equity in the past one year.

Websol will post its quarterly earnings on 25 January 2024 so keep an eye on the key numbers and its management commentary.

#7 Adani Green Energy

Of course, there had to be an Adani stock in this list.

Adani Green Energy is a significant player in India's renewable energy sector, with an operational capacity of 4,763 megawatts (MW) for solar power plants and 647 MW for wind power plants as of September 2023.

One of the best performing stocks in the market, Adani Green saw a steep decline in its value from its 52-week high in January 2023 due to Hindenburg allegations and premium valuation.

But recent developments suggest that the Adani group company has made a spectacular comeback by scrapping acquisitions, pre-paying debt to address concerns about cashflows and borrowings and scaling back its pace of spending on new projects.

The company is building the world's largest renewable energy park that's aimed to have the capacity to generate 30 gigawatts of solar and wind energy, which is enough to power homes of almost 18 million people.

Adani Green Energy also recently finalised a power purchase agreement with the Solar Energy Corporation of India to deliver 1,799 MW of solar power.

#8 Gensol Engineering

Gensol Engineering is engaged in the business of solar consulting & EPC. The services include solar advisory, solar EPC, solar O&M & solar monitoring & analysis.

Last year in August 2023, Gensol Engineering bagged a couple of solar EPC projects in Dubai.

These were the company's first international orders in the Solar EPC space.

Apart from being an established player in the solar space, the company in recent years also took a leap of faith and established an EV manufacturing facility in Pune for the development and production of electric three-wheelers and four-wheelers.

The company is currently in a sweet spot as it continues to get more orders, adding to its future revenue and profit visibility.

This week, it posted its Q3 earnings and reported a strong set of numbers.

Gensol Engineering returned to profit as it reported a net profit of Rs 123.1 million compared to a net loss of Rs 19 million in the year ago period.

During the quarter, Gensol also secured its first Green Hydrogen project by winning the NHPC's Kargil Green Hydrogen Mobility Station EPC Project as the lowest bidder.

While it has a lot of tailwinds working in its favour, you can't ignore the fact that Gensol is still a small solar EPC player, and it faces stiff competition from several established players.

#9 Surana Solar

Surana Solar is engaged in the business of manufacturing solar photovoltaic modules, generation of wind and solar power energy and trading of other solar related products.

The company has two manufacturing plants in Hyderabad.

Shares of the company saw a sharp spike after Modi announced plans for solar rooftop panels. Today again, they're locked in 5% upper circuit.

In the December 2023 quarter, the company returned to black and posted a net profit of Rs 1 million compared to a loss of Rs 15 million in the September 2023 quarter.

While still relatively small, Surana Solar stands to benefit as it makes big moves in the solar segment.

#10 KPI Green Energy

KPI Green Energy provides solar power, both as an independent power producer (IPP) and EPC services to captive power producers (CPP).

In recent months, the company has announced many order wins for solar power projects.

It recently bagged the largest single order from specialty chemical firm Anupam Rasayan to execute wind-solar hybrid power project of 40 MW.

Last week, KPI Green's subsidiary bagged a new order for executing a solar power project.

The order was received from Shree Varudi Paper Mill LLP and is scheduled to be completed in the financial year 2024-25.

One more order that needs a mention is the 2 MW solar power project in addition to a 3-megawatt solar power project from Jayco Synthetics.

No wonder the management is bullish and expects more than 50% topline growth in FY24.

The management is confident of achieving this due to higher execution of CPP orders and commissioning of the 26.1-MW hybrid project.

Apart from the solar hype, shares of KPI Green Energy are in demand these days after the company announced the issue of one bonus share for every two held at its board meet.

#11 Solex Energy

Solex Energy is engaged in manufacturing solar panels, other renewable energy devices, and installation of systems on EPC basis. Solar panels contribute around 95% of the revenue.

In FY23, the company's revenue shot up to Rs 1,617.1 million (m) compared to Rs 723.3 m in FY22 on the back of increased order execution in both solar panels and EPC segments.

This is a big year for Solex Energy. Its new plant at Surat will finish its first year of operation.

Last year, the company spent around Rs 600 million to expand its production capacity by 600 megawatts (MW) by setting this unit.

Further, the suspension of Approved List of Models and Manufacturers (ALMM) mandate for the current year is expected to provide some relief.

#12 Taylormade Renewables

Taylormade Renewables manufactures solar parabolic concentrating systems for steam generation used in steam cooking and other industrial applications.

It also makes components and does EPC work for renewable energy and solar thermal applications, primarily parabolic concentrators.

Some of their other products include bio-mass cook stoves, Eco Chullas, and PV cells.

Prominent names such as ISRO, Jindal Power, Ami Organics, Vardhman Group, Asian Paints, among others, are the company's clients.

#13 Refex Industries

Refex Industries is a specialist manufacturer and re-filler of refrigerant gases in India, particularly, environmentally acceptable gases that are replacements for chloro-fluoro-carbons (CFCs).

In 2022, it entered the power sector, marking its foray in the solar segment. This segment contributes only around 3% for now, which is expected to go up in the coming years.

It has reported increasing profit for the past five financial years. In FY23, the company's revenue tripled while net profit shot up by 157%.

Shares of Refex Industries are in focus these days as its board announced plans to consider a proposal for stock split on 24 January 2024.

#14 Insolation Energy

Insolation Energy is engaged in the business of manufacturing solar panels and modules of high efficiency of various sizes.

The company's 200 MW SPV module manufacturing unit is in Jaipur, spread over more than 60,000 sq. ft area.

After going through the SME route and its consequent listing in October 2022, Insolation Energy has come a long way from having just 50 MW panel production capacity to over 700 MW of capacity at present.

The company is now embarking on an expansion strategy to increase its capacity and venture into new verticals.

In the financial year ended March 2023, Insolation Energy posted record numbers.

The company is planning to add another 500 MW in the next two years, which will take its total capacity to 1,200 MW.

#15 SJVN

SJVN is primarily into hydropower production, pumped-storage power (PS) plants, and wind & solar power.

The 35-year-old power producer has built a sizable presence with its six installed plants across Arunachal Pradesh, Uttarakhand, Himachal Pradesh, and Nepal.

It currently has a power generation capacity of 2,091.5 MW, with 1,912 MW (or 91.4%) being hydroelectric power and PSP.

Solar and wind power are smaller segments, with 81.9 MW or 3.9% share and 97.6 MW or 4.7% share, respectively. In addition to this, SJVN also operates an 86 km-long power transmission line.

In a significant move towards renewable energy, SJVN's wholly owned subsidiary, SJVN Green Energy Limited, inked a power purchase agreement with Bhakra Beas Management Board (BBMB) on 8 September 2023.

Under this agreement, SGEL will develop an 18 MW Solar Power project for BBMB, scheduled for commissioning by August 2024.

SJVN Green Energy also received an order for the development of a 100 MW solar power project in Rajasthan.

On 1 January 2024, SJVN Green Energy launched the Gurhah solar power project in Jalaun, Uttar Pradesh, generating 75 megawatts.

SJVN has a robust background in hydropower generation and a successful track record in implementing wind and solar energy projects.

In Conclusion

There's a constant debate over how much energy our world should consume.

Some argue that an acceleration in energy consumption is causing environmental damage, which could be stagnated or reversed if humans made a conscious choice to consume less energy.

While other opine that that human flourishing is dependent on energy consumption, so we should seek to drastically increase the energy consumption globally.

From a solar industry perspective, a new solar plant is now cheaper than a coal one and the cost per unit of solar energy has dropped over 5x in just the last decade, according to reports.

We at Equitymaster believe energy consumption is good which basically also means good for solar industry.

And no matter how loud the ESG crowd yell or scream, this uncomfortable truth won't change.

We hope you have a profitable trading day.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...