Aug 18- Green Stocks Ride Bounce From GST Plans

On a day when the markets returned to optimism on the back of a key announcement from the PM on GST rationalisation, besides no further worsening of the situation vis-à-vis the Trump Administration, our green pack expectedly made the most of the day. 

Suzlon, the leading wind turbine maker, was a key outlier, dropping over 3% on news that possibly a Rs 6000 order was nothing worth reporting on formally for now. Despite that, the drop is sharper than expected, as the current price takes it well below where it was when news first surfaced about the alleged order. The other major wind player in our list, for instance, Inox Wind, made the most of the goodwill today, rising almost 2%.

That apart, most stocks made the most of a relief rally, which could get better if the Trump administration holds off on the fresh 25% tariffs on India due to start from August 27. For reasons best known to operators, hopes seem to be high on that outcome for now. It must be said, however, that most green stocks underperformed relative to the mid-cap or the small-cap indices today, continuing from a theme of weakness in support at current levels without definite triggers. 

With a slew of fresh green energy forms ranging from solar manufacturers to solar pumps firms, to large EPC developers still looking to enter the markets, we believe the best is behind in terms of the hype cycle around green stocks. Investors have a much better idea of prospects and risk factors, and will continue to readjust expectations and prices based on that. The IPO of Vikram Solar, another storied solar manufacturer that opens tomorrow, will provide further leads on both investor appetite and valuations for solar manufacturers.

Key manufacturers Waaree Energies and Premier certainly enjoyed a good day today after a poor week, rising up on hopes that are clearly veering to the view that punitive US tariffs won't happen. 

The failure of many green stock firms to hold fast on prices is also linked to the sputtering narrative around the domestic market, where there is already talk of overcapacity, intense competition, and further policy disruptions, which have combined to keep hopes lower. That to us seems overblown slightly for now, as many firms in the green pack remain well placed to deliver very strong results over the next two quarters at least, with the possibility of adding to order pipelines that will carry them comfortably into FY27. Considering that, we believe the green pack offers many opportunities for value seekers as well now.

List of Green Stocks