Green Stocks Feb 17- Stocks Make Steady Gains On Positive Day

The green pack continued to make steady gains on a day when the broader indices also tended to be on the positive side. Notably, wind energy firms have lost momentum as fears grow that wind energy growth could be a victim of BESS growth in India.

The highlighting of this factor specifically by ReNew Energy, one of the largest wind energy users until now and the second largest green developer, only drove home the risks that have emerged for the wind sector in the past year. Add to that longer-term issues linked to the higher cost of installation and maintenance, and things could go from good to bad fairly quickly without corrective action. 

As we have been repeatedly stressing here and more broadly across SaurEnergy, the solar+_BESS juggernaut has only just started to play out, and a period of low prices could upend quite a few plans for Hybrid as well as other projects. 

On the specific side, Sterling and Wilson Renewable shot up, as it is prone to do every now and then, usually with little basis for the immediate move. A running theme, of course, is the possibility of large orders finally from parent firm Reliance, as the latter starts to add the promised green energy capacity in Khavda, Gujarat. But no such news has been announced formally.

Post a generally strong set of Q3 results except for the odd exception like Shakti Pumps, stocks in the green pack are at their lowest PE levels, when taken on an annualised basis. Does that mean a buying opportunity? Probably, but a wait-and-watch approach is still warranted before jumping into this sector with a huge policy overhang.  Consider how any tinkering at this stage with the ALCM norms, expected to kick in from June 1, could hit manufacturers, who are counting on strong margins based on a tight market for domestic cell.

The bigger worry for the government, however, should be why cell making capacities have been an uphill climb versus module assembling capacities. It is a complexity that was massively underplayed when setting deadlines, and as always, has come back to bite now.

List of Green Stocks