Adani Green – Developing Green Portfolio for Future

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This post has been written by Suraj Khaitan for FinMedium Research Desk.

Introduction of Adani Green

Founded by Gautam Adani in 2015, Adani green is one of the largest renewable companies in India.

“The company develops, builds, owns, operates and maintains utility-scale grid-connected solar and wind farm projects”- .They are generally into solar and wind power plants- they built these plants and sell the energy generated from this powerplants.

solar and wind power plants- adani green energy limited

Key customers of AGEL include the National Thermal Power Corporation (NTPC) and Solar Energy Corporation of India (SECI) and various State Discoms.

In early 2020, French energy company TOTAL S.A entered into a binding agreement with AGEL for the investment of US$510 million to acquire a 50% stake in the latter.

PROJECTS- ADANI GREEN ENERGY LTD

PRODUCT PORTFOLIO OF ADANI GREEN ENERGY

The company is present in 11 states and contains a portfolio of 54 operational projects and 12 projects under construction.

It has an operational portfolio of 2595 MW and 3395 MW is under construction as of 31 Mar, 2020.

PRODUCT PORTFOLIO - ADANI GREEN ENERGY LTD

After 1st half of FY21, it had an operational portfolio of 2850 MW and 3345 MW under construction that would ramp up in 5-12 months.

PORTFOLIO- ADANI GREEN ENERGY LTD
PORTFOLIO- ADANI GREEN ENERGY LTD.

CEO’S MESSAGE

CEO MESSAGE - ADANI GREEN ENERGY LTD

The company plans to achieve 25GW by 2025 but the pace at which it is growing it is expected to get to this number much before 2025.

INDUSTRY OVERVIEW

INDUSTRY PERFORMANCE

Since 2014 India has seen a rapid growth in renewable energy. The installed capacity of renewable energy generation in the country has grown 72% from 80 GW to 138.9 GW during the past six years.

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Solar energy has seen the highest growth from 2.6 GW in 2014 to 34.6 GW on 31st Mar 2020.

India’s energy demand is expected to reach 15820TWh by 2040 and this demand cannot be meet this demand wholly by coal. Renewable energy will play a major role in it.

India has committed to install around 40% of its power generation capacity by 2030 and the major role will be played by renewable energy that has a target of 175GW by 2022.  

GOVERNMENT SUPPORT

A government support is very essential for any sector to progress. At UN Climate Summit in September 2019, Prime Minister of India, Narendrabhai Modi reiterated the commitment to increase India’s renewable capacity much beyond 175 GW and to take it further to 450 GW by 2030.

  • On Feb 1, 2020 FM Nirmala Sitharaman announced the budget for financial year 20-21 of Rs 220 billion for power and renewable sector.
  • The GOI also proposed that a large solar capacity would be installed along the railway tracks owned by Indian railway.
  • In her budget speech, FM Nirmala Sitharaman, while presenting a 16-point action plan for the agriculture sector aimed at doubling farmers’ income by 2022, announced the allocation of ` 1,000 crore for extending the Kisan Urja Suraksha Evam Utthaan Mahabhiyan (KUSUM) scheme. This would aid farmers in adopting solar power for agricultural purposes and utilise barren/unproductive land for generating revenues.
  • To attract investment in the power sector, the concessional corporate tax rate of 15% could be extended to new domestic companies engaged in the generation of electricity.
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All these actions by GOI would help India to meet its commitments in a suitable manner.

COVID 19 IMPACT ON INDUSTRY AND ADANI GREEN ENERGY LTD

The renewable energy sector works on the basis of demand and supply. All the sector were impacted by covid 19 and just like any other sector this sector was too impacted by it.

Power demands were reduced by 20-25% during the month of May and April and the supply chain was also disturbed due to this.

The renewable capacity addition has slowed down significantly during the lock-down period due to strict containment measures and social distancing.

However, in the midst of this natural and unavoidable catastrophe, there was some relief to this sector as MNRE has ordered that payment to renewable energy generators should not be stopped.

The company does not expect demand side to be affected by this pandemic.

There was a temporary disruption in the supply side as much of its suppliers are from China but the company expects that it too won’t affect the company materially.   

FINANCIAL ANALYSIS OF ADANI GREEN ENERGY LTD

PROFIT AND LOSS STATEMENT- ADANI GREEN ENERGY LTD
PROFIT AND LOSS STATEMENT OF ADANI GREEN ENERGY LTD

Revenue was increased by 24% to 2549 cr.

Depreciation method was changed from WDV to SLM as a result depreciation for FY20 is 394cr as against 1062cr last year.

EBITDA was increased by 4% to 2549 Cr due to increase in operational capacity.

H1FY21- ADANI GREEN ENERGY LTD
RESULTS OF ADANI GREEN ENERGY LTD AFTER H1 FY21
PARTICULARS2017201820192020
Current ratio0.930.620.770.86
Interest coverage ratio0.540.620.50.96
Debt to equity ratio3.617.3514.5721.57
Debtors days (in days)245209134106
Cash conversion cycle28733826566.21
ROCE(%)4.513.64.989.63
ROE(%)-3.88-10.25-56.42-3.04

PEERS COMPARISON

NAMEROCE(%)P/EPROMOTER HOLDINGS(%)SALES GROWTH(%)PROFIT GROWTH(%)CURRENT RATIO
ADANI GREEN ENERGY LTD9.632045.0174.914.18177.861.25
POWER GRID CORPN11.538.4851.345.4712.950.90  
NTPC9.777.3151.028.62-15.410.91
NHPC LTD8.616.4870.953.78-4.801.48  
TATA POWER CO.7.5317.2146.85  -7.25-2.480.59
TORRENT POWER13.128.96  53.57-11.3327.331.15

ROAD AHEAD OF ADANI GREEN ENERGY LTD

The company wants to achieve a goal of 25 GW of installed capacity by 2025.

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The company seeks to become the largest solar power company by 2025 and the largest renewable power company in the world by 2030.

The portfolio of renewable power generating assets stands at 2.5 GW and it expects to get double by 2022, with the implementation of 3.5 GW under construction capacity.

ROAD AHEAD - ADANI GREEN ENERGY LTD

Read more research report on Indian companies here

This post has been written by Suraj Khaitan for FinMedium Research Desk.

Also Watch: Adani Green Energy Fundamental Analysis

Cover Image: Economic Times

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