This Renewable Energy Stock is Up 10,000% in 5 Years

Following several announcements by the finance minister in the Union Budget, it became clear that the "renewable" theme has clearly picked up pace in India.

India is quickly becoming one of the world leaders in embracing the transition.

The government announced that the roofs of one crore households will be solarized.

Apart from solar, another subset under the renewable theme - wind energy - also got a shot in the arm in this budget.

You see, cheap power is almost always produced through renewable energy mechanisms. This leads to various industries making massive financial investments into the production of renewable energy, and also driving renewable energy innovation at the same time.

This brings us to the stock that we want to discuss in this article... which caters to the renewable space... or at least had the word 'renewable' in its name.

About SG Mart

Erstwhile known as Kintech Renewables, SG Mart was primarily engaged in the renewable energy business.

The company is an independent power producer, engaged in the business of power generation.

It's also an EPC company which provides turnkey and renewable power solutions like wind farm/solar rooftop development, wind power generation and wind turbine installation and maintenance services.

Some of its clients include Suzlon, Vestas, Gamesa, Regen, and Global Wind.

An interesting thing to note is that the company was engaged in the renewables business, but its current business is diversified.

What Explains the 10,000% Rally?

In the past five years, shares of the company have surged over 10,000%, rising from Rs 100 levels in May 2019 to Rs 10,600 at present.

In the past two years when the renewable energy theme "really" picked up following the government's announcement to boost clean energy to two thirds of overall capacity, shares are up over 5,000%.

The company also made it to the AMFI list of stocks gaining most in terms of percentage.

The company's average marketcap ballooned to Rs 21 billion during the July-December 2023 period from Rs 790 million during January-June.

The sharp rally has also made the company decide to split its shares along with issuing a bonus share.

Shares will be split in the 1:10 ratio as and when the company announces the record date.

SG Mart is currently led by Sanjay Gupta who is known for playing pivotal role at multiple companies' transformation (APL Apollo and Apollo group).

Looking to regularise the huge unorganised market of building materials, he acquired Kintech Renewable (now SG Mart) in September 2023.

Back then, he also raised funds through preferential allotments and big names like Mukul Agarwal and Sunil Singhania participated in the same at Rs 5,000 per share.

The company recently appointed Akshay Kumar as its brand ambassador.

In one of its commentaries, the company mentioned that it will be a B2B business and solve the huge problem of building materials across India where any builder or government body can order the material.

Reports suggest that a merger could be on the cards with APL Apollo, which already has a distributor chain.

However, a concerning part that investors may be forgetting is that future earnings could take a reality check. This has happened before in the US market not very long ago.

In 2021, US top renewable stocks were booming but as valuations shot up and production capacity weighed on prices, stocks saw a sharp decline.

It's difficult to ascribe reasons to the monstrous rally in SG Mart over the past few months.

You can guess the past presence of the company's business and the word 'renewable' in the name has attracted investors. Especially, given the market's newfound love for all things green.

An ideal approach would be to follow its fundamentals closely and see if the company shows consistency in profit and revenue.

It remains to be seen how the stock performs in the coming months.

One predictable thing is that there could be a bullish sentiment surrounding the stock ahead of its stock split and bonus issue.

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...