Green Stocks Sep 18: Stocks Suffer A Poor Day At The Markets

Someone at Saatvik Solar, due to open for its IPO, must be a little worried, as the markets, particularly the green energy pack, had a poor day out today. 

The IPO is certainly not low-priced, although it is at par with listed peers in the solar manufacturing space. So, a very interesting few days coming up there to judge the mood of investors towards solar stocks. Keep in mind that Vikram Solar, another solar manufacturer with a very high oversubscription for its offering, is up barely 2.5% since its listing. 

Coming back to the green pack, a slight pullback from the market towards the closing minutes was not enough to pull back many of the green pack from the red, with most stocks finishing with losses for the day. As we have said earlier, the markets might not be tired of green energy stocks, but are certainly trying their best to distinguish between firms now, in terms of valuations and prospects. The manufacturing space is particularly tough to call for many, when you go by recent history, which showcases an incredible growth spurt and profitability, order books that are healthy, but also a future that points towards a very high risk of overcapacity. Add to that the suspicion that the field is gradually being loaded in favour of the really large players, and we might see a reassessment of many stocks soon. 

A classic googley has been the draft proposal to expand the ALMM to wafers and ingots, the final step in the backward integration of manufacturing modules, by June 2028. If that timeline holds, it will mean that manufacturers that have invested in cell lines since last year and the next year would have barely finished with one investment cycle, and they have to start on the next one. That's the kind of capex-hungry behaviour that leads to high debts and rising risk. Indian investors have learnt to value zero-debt and low-debt firms after years of missteps by leveraged firms.  

However, a market that has been in limbo for almost two quarters now will also adjust to earnings growth at some stage, and as earnings news comes in for the September quarter in three weeks, one can certainly look forward to some upward adjustments. Until then, this remains a buy on dips market, and today's dip may not be enough, actually, for most.

List of Green Stocks