Valuation of Solar Companies in India

Recently, Economic Times had an article “Solar power stocks see multi-fold jump on hopes from Narendra Modi govt” where the writer had shown that some of the solar stocks in India had returned good financial returns in the last one year.

The 3 month stock return as of 25th June 2014 was:
Swelect Energy–90.08
Ujaas Energy–171
Websol Energy–385
IndoSolar–275

This was after the elections 2014 and before the budget.
Companies with exposure to the solar power segment saw a bull-run since the beginning of this year, with stock prices jumping three-and-half times. They gained on expectation that the Modi government would implement the successful Gujarat solar-power model elsewhere, too.

I have used the comparable valuation method to see where the stocks stand today; and found that unfortunately the bull run in these stocks don’t have a substantial base.

All the above 4 companies are currently trading at an average of 65-70% of their 52 week high; as of 30th July 2014 prices.

WebSol Energy and IndoSolar both have negative net profit and EPS since the last 2 years. The positive side is that the losses have decreased in the FY 2013-14.

There is no clear trend on the industry EBITDA and Net Profit margins. Maybe I will need to add some more companies as we move along.

Similarly, the valuation metrics are also not very useful in terms of a trend.

P/EPS does not look very favorable to currently invest in solar stocks in India.

More details in the attached pdf file.Blog 31st July 2014- Indian Solar Companies

Please increase the view size in pdf file to see the nos clearly

Please note that the financial nos are from moneycontrol.com and currently I have not adjusted for “off-the normal revenue/expenses”.

 

 

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