Green Stocks May 23: Weekend Portends Volatile Period Ahead

With yet another month a week ago from closing, our green energy pack might yet end with some gains in May, unless some more surprises lie ahead. The big one today was of course the impact of the US move to strip benefits for solar manufacturing firms, which took down all the solar manufacturing firms in the US, and Waaree Energies here besides Premier Energies. While Waaree suffered the biggest hit as the most 'exposed' firm tp the US market besides its own 1.6 GW manufacturing setup there, it remains to be seen if the correction today was an overreaction, or there are more surprises in store from the Trump administration.

So far, going by the track record of the same, outcomes have rarely followed intentions, and it would be too early to rule out a reversal of sorts here as well. What will be really worth watching is if Waaree does go ahead with plans for further expansion in the US market.

In an otherwise positive market, Tata Power stood out for keeping up and staying ahead of the market, with most other green energy stocks staying put or making marginal gains or losses. Some like KPI Green have given up a significant portion of their gains in the past three days. Considering how these gains have been driven by strong results, we continue to hold that stocks which have delivered strong Q4 numbers will eventually outrun the market in the medium term. The next big trigger for our green pack would seem to be some sort of a resolution for the logjam in power sales agreements that is building up so that projects can move ahead faster towards execution. Otherwise, firms exposed to the residential and C&I segments through rooftop solar will continue to do well, even as the largest utility-scale firms lag. However, even in case of the latter, there is enough of a project pipeline to take them comfortably to Q2 of FY26 for most firms in our pack, before alarm bells ring louder.

Caught between taking care of the interests of manufacturing firms versus developers and the end consumers, the government has a tough role to crack, especially in a low oil and gas price scenario where the temptation to lock in savings in the short term are higher.