SBI Securities has identified KPI Green Energy as a ‘rising star’ for 2024. This renewable energy company has been making headlines with its remarkable stock performance, showing an impressive 253% increase over the past year.
If you’re looking for a stock that’s on the rise, KPI Green Energy might just be worth considering. But what’s behind this surge, and why does SBI Securities see such potential in it? Let’s break it down.
What makes KPI Green Energy special?
KPI Green Energy operates in the renewable energy sector, which is gaining traction as the world shifts towards sustainable solutions. This company is involved in both Captive Power Plant (CPP) and Independent Power Producer (IPP) segments, focusing on wind and solar energy.
In the latest quarter, KPI Green Energy reported impressive growth figures, with sales up 83.8% year-on-year, reaching ₹348 crore. Additionally, EBITDA saw a 90.8% increase, hitting ₹132.1 crore, while profit after tax (PAT) rose by a notable 98.8% to ₹66.1 crore.
These numbers are not just random spikes; they reflect solid execution of orders. KPI Green Energy successfully installed 15 MW and 13 MW of capacity in CPP and IPP segments, respectively, during the quarter.
This growth is fueled by the increasing demand for renewable energy, making KPI Green Energy a key player in this space.
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The stock’s journey: A look at its performance
KPI Green Energy’s stock has been on a rollercoaster ride. In 2024 alone, it has surged over 108% year-to-date (YTD). The stock recently hit a record high of ₹1,116, although it has since dipped slightly to ₹1,011.
Even so, it’s still up 196% from its 52-week low of ₹255.46, which was reached on September 12, 2023.
SBI Securities maintains a ‘buy’ rating on the stock, with a target price of ₹1,246, indicating an upside potential of nearly 25%. This projection is based on the stock’s current trading levels of 47.2x/29.5x of its FY25E/FY26E earnings.
A closer look at the order book
One of the key reasons behind KPI Green Energy’s success is its robust order book. As of August 2024, the company has an order book totaling 2,327 MW. This is split between 1,260 MW in IPP and 1,067 MW in CPP.
Over the first five months of FY25, KPI Green Energy secured new orders amounting to 1,117 MW, including 916 MW in IPP and 201 MW in CPP.
These orders are not just for show. The company has ambitious plans to complete the CPP orders within the next 12-15 months, while the new IPP orders are projected to be fully executed by FY27. At full capacity, the IPP segment alone could generate an additional ₹700-800 crore in annual revenue.
With long-term Power Purchase Agreements (PPAs) in place, this growth is not just a flash in the pan.
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Expanding capacity: The road to 10,000 MW
KPI Green Energy has set an ambitious target to achieve a cumulative 10,000 MW of power generation by 2030. This is a significant leap from the 445 MW that has been executed to date. To put this into perspective, approximately 140 MW of the current IPP capacity is wind power, with the rest being solar.
Achieving this target won’t be easy, but KPI Green Energy is already laying the groundwork. The company is raising ₹1,000 crore through a Qualified Institutional Placement (QIP) to fund its expansion plans.
The floor price for the QIP is set at ₹983 per share, with an assumed issue price of ₹934 per share, factoring in a maximum discount of 5%. This capital raise, which involves an equity dilution of approximately 8.9%, will help maintain the company’s debt-to-equity (D/E) ratio at around 1x.
Why investors should pay attention
If you’re still wondering why KPI Green Energy is worth watching, consider this: the company is not just riding the wave of renewable energy. It’s actively shaping the future of the sector with strategic moves and solid execution.
The ongoing QIP is a strategic step to support its growth and ensure that the company remains financially stable while pursuing ambitious goals.
Moreover, the company’s management has a clear vision for the future, with plans to scale up power generation significantly. This kind of forward-thinking is what sets KPI Green Energy apart from its competitors.
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Final thoughts
KPI Green Energy has all the ingredients to be a major player in the renewable energy sector. Its impressive financial performance, robust order book, and ambitious expansion plans make it a stock worth keeping an eye on.
With SBI Securities backing it as a ‘rising star’ for 2024, KPI Green Energy could be a solid addition to your portfolio if you’re looking for growth opportunities in the renewable energy space.
But as always, it’s essential to do your research and consult with a certified expert before making any investment decisions. After all, the stock market can be unpredictable, and it’s important to make informed choices that align with your financial goals.
