Investing necessitates a relatively straightforward approach to achieve substantial returns. Identifying emerging trends and ensuring the financial stability of the chosen company are crucial steps. This pursuit has prompted numerous investors to engage with renewable energy, a concept ingrained in our minds since childhood, as the inevitable future post depletion of fossil fuels. Consequently, several stocks in the renewable energy sector have experienced exponential growth this year.
Green energy stocks encompass enterprises focused on advancing alternative technologies that harness renewable resources, emitting minimal to zero pollutants. The predominant sources of green energy encompass sunlight, wind, and heat. Additionally, it can encompass eco-friendly hydroelectric sources with low environmental impact, along with specific forms of biomass. Companies dedicated to achieving carbon neutrality through these resources, while concurrently diminishing reliance on fossil fuels, fall under the category of green energy companies.
Within this piece, we delve deeper into the premier green energy stocks within India. Continue pursuing to unveil the details!
Green Energy Industry: An Overview
Presently, India boasts a renewable energy capacity of 152.36 GW, constituting a significant 38.56% of the total installed power capacity.
A key driving force behind this remarkable growth has been the proactive approach and extensive backing provided by the government. The government’s ambition is evident in its aim to achieve a renewable energy capacity of 227 GW by the conclusion of 2022, surpassing the targets stipulated by the Paris Agreement of 175 GW. Within this, the solar energy capacity is projected to reach 114 GW, while wind power capacity will hit 67 GW.
Looking ahead to 2030, the government sets an even more ambitious target of establishing a renewable energy capacity of 523 GW. Out of this colossal figure, an impressive 60% is earmarked to be supplied by solar energy, with an additional 14% coming from hydro sources.
Factors considered for the selected Green Energy Stocks
Given their rarity and adaptability, Green Energy Stocks emerge as outstanding choices for investment. To become an astute investor in Green Energy Stocks, one must grasp and comprehend a wide range of unique factors.
We have curated the following list of top Green Energy Stocks in India based on the following factors:
1. Market Cap
We have chosen only those Green Energy Stocks whose market cap is greater than 5000 Crore INR.
2. Price to Earning Ratio
The better a Green Energy Stocks ‘s performance, the lower its price-to-earnings ratio tends to be.
3. Sales
We have selected Green Energy companies with an Average Sales Growth (3 years) of more than 10%.
4.Profit
The following list consists of Green Energy companies whose Average Profit growth (3 years) > 10%.
Best green energy stocks to buy in India
Adani Power Ltd
Adani Power (APL), a division of the diverse Adani Group, stands as the preeminent private thermal power producer within India. The company, in conjunction with its affiliated entities, distributes electricity generated from these endeavors through a blend of extended Power Purchase Agreements, near-term PPAs, and in the open market as well.
- Market Cap – ₹ 1,06,895 Cr.
- Current Price – ₹ 277
- High / Low – ₹ 433 / 132
- Stock P/E – 7.27
- ROE – 44.0 %
Over the past five years, the company has demonstrated an impressive compound annual growth rate (CAGR) of 48.1% in terms of profit, reflecting robust financial performance. Additionally, the company boasts a commendable track record of return on equity (ROE), achieving a noteworthy ROE of 33.8% over a span of three years. Notably, the company has effectively streamlined its working capital requirements, witnessing a reduction from 103 days to 74.2 days.
Despite consistently reporting profits, the company has refrained from distributing dividends to its shareholders. The company’s tax rate appears to be at a relatively low level, potentially contributing to its financial dynamics. There is a possibility that the company is leveraging the strategy of capitalizing the interest cost. It’s important to highlight that the promoters have pledged 25.1% of their holdings, which could have implications for the company’s ownership structure.
It’s worth mentioning that the company’s earnings encompass a substantial other income amounting to Rs. 9,585 Crores. This diverse financial landscape underscores both the achievements and intricacies within the company’s financial performance.
CESC Ltd
Established in 1978, CESC Ltd operates within the realm of electricity generation and distribution. As a cornerstone enterprise of the RP-Sanjiv Goenka Group, CESC holds the distinction of being India’s first fully integrated electrical utility company, engaging private participation in power generation, transmission, and distribution. Its operational scope extends over Kolkata, Hooghly, Howrah, North and South 24 Parganas in West Bengal, encompassing a broad spectrum of approximately 3.4 million consumers, spanning domestic, industrial, and commercial sectors.
- Market Cap – ₹ 10,227 Cr.
- Current Price – ₹ 77.2
- High / Low – ₹ 86.6 / 62.1
- Stock P/E – 7.28
- ROE – 12.2 %
The stock is currently valued at 0.94 times its book value, indicating a particular ratio between its market price and intrinsic value. Moreover, the stock offers an attractive dividend yield of 5.83%, which signifies the dividend income in relation to its market price. The company has consistently upheld a robust dividend payout ratio of 44.6%, reflecting its commitment to distributing profits to shareholders.
On the downside, the company has exhibited lackluster sales growth, with an increase of only 6.75% over the preceding five years. Additionally, the company’s return on equity (ROE) over the past three years has been relatively modest, standing at 13.1%. This measure assesses the company’s ability to generate profits in relation to its shareholders’ equity.
It’s worth noting that the company’s earnings encompass a substantial amount of other income, totaling Rs. 1,717 Crores. This diverse earnings composition suggests the presence of various income sources beyond the core operations of the company.
Power Grid Corporation of India Ltd
Power Grid Corporation of India Limited, a prominent Maharatna Central Public Sector Undertaking (CPSU), holds the position of India’s largest electric power transmission company. Established in 1989, it is owned 51.34% by the Government of India and operates under the Ministry of Power. PGCIL’s primary objective is the establishment of high-voltage transmission lines, both extra-high voltage alternating current and high-voltage direct current (HVDC). Acting as a crucial intermediary, it efficiently transfers significant power quantities from central generators and power-abundant regions to high-demand areas within and across regions. Additionally, the corporation undertakes important projects assigned by the government, focusing on planning, implementing, operating, and maintaining the Inter-State Transmission System (ISTS), along with providing telecom and consultancy services.
- Market Cap – ₹ 1,67,655 Cr.
- Current Price – ₹ 240
- High / Low – ₹ 267 / 186
- Stock P/E – 11.0
- ROE – 19.4 %
The stock offers an attractive dividend yield of 6.14%, indicating a substantial ratio of dividend income to its market price. The company has consistently upheld a robust dividend payout ratio of 60.0%, reflecting its commitment to distributing profits to shareholders.
On the downside, the company has exhibited lackluster sales growth, with an increase of only 8.76% over the preceding five years. Moreover, the company’s tax rate appears to be relatively low, potentially impacting its financial dynamics.
Additionally, there is a possibility that the company is adopting the strategy of capitalizing interest costs, which can have implications for its financial reporting and management.
NTPC Ltd
NTPC (National Thermal Power Corporation) Ltd, along with its subsidiaries, associates, and joint ventures, predominantly engages in the generation and distribution of substantial power volumes to state power utilities. The group’s broader spectrum of operations encompasses diverse activities such as offering consultancy services, overseeing project management, engaging in energy trading, exploring opportunities in oil and gas, and participating in coal mining activities.
- Market Cap – ₹ 2,12,066 Cr.
- Current Price – ₹ 219
- High / Low – ₹ 227 / 153
- Stock P/E – 11.9
- ROE – 12.0 %
The stock is presenting a favorable dividend yield of 3.32%, signifying a noteworthy proportion of dividend earnings relative to its market value. The company has consistently upheld a strong dividend payout ratio of 41.0%, underscoring its dedication to rewarding shareholders.
Furthermore, there has been a positive enhancement in debtor days, with a reduction from 75.7 to 59.7 days. This improvement indicates a more efficient management of receivables.
However, there are certain drawbacks to consider. The company has demonstrated a relatively modest return on equity of 12.4% over the previous three years, which may raise concerns about its profitability. Additionally, there is a potential indication that the company is leveraging the practice of capitalizing interest costs, which can impact its financial presentation and strategies.
NHPC Ltd
NHPC, classified as a Mini Ratna category I public sector utility, stands as the premier hydroelectric power generation entity under the aegis of the Government of India. The company’s core operations revolve around the production and distribution of substantial power volumes to diverse Power Utilities. In addition to this primary endeavor, NHPC is engaged in ancillary activities, including the provision of project management, construction contracts, consultancy services, and power trading.
- Market Cap – ₹ 49,723 Cr.
- Current Price – ₹ 49.5
- High / Low – ₹ 52.7 / 33.4
- Stock P/E – 12.8
- ROE – 10.8 %
The stock is currently offering an attractive dividend yield of 3.74%, indicating a favorable ratio of dividend earnings in relation to its market price. Consistently, the company has upheld a robust dividend payout ratio of 49.5%, underscoring its commitment to rewarding shareholders.
However, there are certain drawbacks to consider. The company has exhibited lackluster sales growth, with an increase of only 6.46% over the previous five years. Additionally, the company’s return on equity over the past three years has been relatively modest, standing at 10.6%. This measure evaluates the company’s ability to generate profits concerning its shareholders’ equity.
There is also the possibility that the company is employing the strategy of capitalizing interest costs, potentially impacting its financial reporting and management.
Moreover, the company is facing a challenge with high debtor days, with a figure of 212 days. This suggests a potentially extended period for the company to collect its receivables, which can have implications for its cash flow and operational efficiency.
NLC India Ltd
NLC India Limited, a prominent Navaratna Company and previously known as Neyveli Lignite Corporation Limited, is a key player in lignite mining and power generation from both lignite and Renewable Energy Sources in India. Operating under the Ministry of Coal, Government of India, it holds a significant role in fossil fuel mining and thermal power generation. With operations in Neyveli, Tamil Nadu, and Barsingsar, Rajasthan, NLC efficiently distributes power to various state utilities across regions. It possesses substantial lignite reserves, notably contributing to India’s total lignite capacity, with a significant share in states like Tamil Nadu, Gujarat, Rajasthan, and Puducherry. The company manages multiple opencast lignite and coal mines, contributing to India’s energy landscape.
- Market Cap – ₹ 18,394 Cr.
- Current Price – ₹ 133
- High / Low – ₹ 139 / 65.0
- Stock P/E – 14.6
- ROE – 9.56 %
The company’s consistent dividend payout ratio of 27.0% underscores its commitment to distributing profits to shareholders. The positive reduction in debtor days from 162 to 96.3 days reflects improved receivables management, expediting outstanding payment collection.
Additionally, the company’s streamlined working capital, reduced from 187 to 138 days, showcases efforts to enhance operational efficiency and financial management.
However, challenges exist, including a modest 7.90% return on equity in the last three years, raising concerns about profit generation from shareholders’ equity. The presence of contingent liabilities worth Rs. 7,654 Crores suggests potential future financial obligations. The company’s potential capitalization of interest costs and its significant other income of Rs. 1,332 Crores further diversify earnings beyond core operations.
Torrent Power Ltd
Torrent Power Ltd is a significant player in India’s power sector, operating as an integrated power utility enterprise that covers a comprehensive spectrum of activities, including power generation, transmission, and distribution. Its operational footprint extends across several states, namely Gujarat, Maharashtra, Uttar Pradesh, and Karnataka. A pivotal entity within the Torrent Group, which operates across diverse industries including pharmaceuticals, power, and city gas distribution, Torrent Power Ltd plays a vital role in contributing to the energy landscape and the conglomerate’s multifaceted endeavors.
- Market Cap – ₹ 31,819 Cr.
- Current Price – ₹ 662
- High / Low – ₹ 749 / 431
- Stock P/E – 15.5
- ROE – 19.6 %
The company’s prospects for the upcoming quarter appear promising, supported by its track record of maintaining a robust dividend payout ratio of 65.1%, showcasing a dedication to providing returns to shareholders.
Yet, certain concerns warrant attention. The stock’s current trading multiple of 2.89 times its book value implies a potential premium over its inherent value, urging a closer examination of its valuation.
Furthermore, the company’s three-year return on equity of 13.9% has been comparatively moderate, raising questions about its efficiency in generating profits in relation to the equity invested.
SJVN Ltd
SJVN is a key player in electricity generation and hydro-power project consultation, aiming to expand its generation capacity to 5,000 MW by 2023, 12,000 MW by 2030, and an impressive 25,000 MW by 2040. The company maintains projected debt-to-equity ratios of 70:30 for regulated projects and 80:20 for renewables, requiring substantial equity of over Rs 250 billion for its existing 15 GW pipeline up to 2030. Governed by the Indian and Himachal Pradesh governments, SJVN is promoted by these entities, with director appointments made by the President of India through the Ministry of Power. Leveraging stable revenue from long-term Power Purchase Agreements, SJVN is actively engaged in numerous phases of projects, with an impressive total capacity of around 31,905 MW spanning ongoing construction, pre-construction, approval, survey, and investigation stages.
- Market Cap – ₹ 21,437 Cr.
- Current Price – ₹ 54.6
- High / Low – ₹ 62.8 / 27.9
- Stock P/E – 20.6
- ROE – 10.2 %
Consistently, the company has upheld a strong dividend payout ratio of 72.0%, indicating its commitment to distributing profits to shareholders.Furthermore, there has been a positive enhancement in debtor days, with a reduction from 66.0 to 34.4 days. This indicates a more efficient management of receivables, allowing the company to collect outstanding payments in a timelier manner.
However, there are certain drawbacks to consider. The company has demonstrated lackluster sales growth, with an increase of only 5.69% over the preceding five years. Additionally, the company’s return on equity over the past three years has been relatively modest, standing at 11.0%. This measure evaluates the company’s ability to generate profits in relation to its shareholders’ equity.
Additionally, there is a possibility that the company is utilizing the practice of capitalizing interest costs, which can impact its financial reporting and management.
Tata Power Company Ltd
Tata Power Company Ltd is a comprehensive player in the electricity sector, engaged in generation, transmission, and distribution with a dedicated focus on renewable sources. Alongside fabricating solar roofs, the company aims to establish 100,000 electric vehicle charging stations by 2025. With a total capacity of around 13,985 MW, Tata Power’s diverse portfolio encompasses thermal, hydro, renewable, and waste heat recovery projects. The company envisions an 80% transition to clean energy by 2030 and complete conversion by 2045, while also pursuing expansion into low-carbon business domains.
- Market Cap – ₹ 75,059 Cr.
- Current Price – ₹ 235
- High / Low – ₹ 251 / 182
- Stock P/E – 22.3
- ROE – 12.6 %
The company has achieved impressive profit growth with a compounded annual growth rate (CAGR) of 44.9% over the past five years.Furthermore, the company has consistently maintained a robust dividend payout ratio of 31.7%, demonstrating its commitment to providing dividends to shareholders.
However, there are certain drawbacks to consider. The stock is currently trading at a multiple of 2.61 times its book value, which suggests a potential premium over its intrinsic worth.Additionally, the company’s return on equity over the past three years has been relatively modest, standing at 9.47%. This measure evaluates the company’s ability to generate profits in relation to its shareholders’ equity.
Furthermore, the company’s earnings encompass a significant amount of other income, totaling Rs. 5,228 Crores. This diverse earnings composition suggests the presence of various income sources beyond the company’s core operations.
JSW Energy Ltd
JSW Energy Ltd, along with its subsidiaries, is a prominent player in power generation operating in Karnataka, Maharashtra, Nandyal, and Salboni. As the power business holding entity of the JSW Group, it also engages in mining activities through a joint venture and turbine manufacturing via an associate company. With long-term Power Purchase Agreements (PPAs) covering 81% of its capacity, the company ensures stable revenue. Notably, 98% of its capacity under long-term PPAs operates under take-or-pay agreements, solidifying its revenue base.
- Market Cap – ₹ 51,684 Cr.
- Current Price – ₹ 314
- High / Low – ₹ 369 / 205
- Stock P/E – 43.1
- ROE – 7.22 %
Consistently, the company has upheld a strong dividend payout ratio of 27.5%, showcasing its commitment to distributing profits to shareholders.However, there are certain drawbacks to consider. The stock is currently trading at a multiple of 2.77 times its book value, suggesting a potential premium over its intrinsic worth.
Additionally, the company has demonstrated sluggish sales growth, with an increase of only 5.12% over the preceding five years. Moreover, the company’s return on equity over the past three years has been relatively modest, standing at 8.01%. This measure evaluates the company’s ability to generate profits in relation to its shareholders’ equity.
Furthermore, there is a possibility that the company is leveraging the practice of capitalizing interest costs, which can impact its financial reporting and management.Moreover, there has been an increase in debtor days, rising from 45.0 to 54.1 days. This suggests a potentially prolonged period for the company to collect its receivables, which can influence its cash flow and operational efficiency.
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List of best Green Energy Stocks to buy in India
|
Rank |
Brand Name |
Market Cap (in INR crores) |
Price to Earning Ratio |
|
1 |
Adani Power Ltd |
₹ 1,06,895 Cr. |
7.27 |
|
2 |
CESC Ltd |
₹ 10,227 Cr. |
7.28 |
|
3 |
Power Grid Corporation of India Ltd |
₹ 1,67,655 Cr. |
11.0 |
|
4 |
NTPC Ltd |
₹ 2,12,066 Cr. |
11.9 |
|
5 |
NHPC Ltd |
₹ 49,723 Cr. |
12.8 |
|
6 |
NLC India Ltd |
₹ 18,394 Cr. |
14.6 |
|
7 |
Torrent Power Ltd |
₹ 31,819 Cr. |
15.5 |
|
8 |
SJVN Ltd |
₹ 21,437 Cr. |
20.6 |
|
9 |
Tata Power Company Ltd |
₹ 75,059 Cr. |
22.3 |
|
10 |
JSW Energy Ltd |
₹ 51,684 Cr. |
43.1 |
Conclusion
When considering the finest green energy stocks in India, it’s evident that the sector demands substantial capital investment. Surprisingly, despite displaying less than stellar financials, these stocks have demonstrated exceptional performance in 2022. This success can be attributed to the anticipation of a more environmentally conscious future, where these companies hold a strategic advantage.
This anticipation is indeed well-founded, given that the future holds a significant emphasis on sustainability, and companies unwilling to evolve could find themselves falling behind. With this, we conclude this post! Feel free to share your insights regarding India’s greener future in the comments section below. Wishing you successful investments!
What did we learn?
