Adani Green, NTPC Green, ACME Solar shares: An analyst initiates coverage with up to 74% upside

Shares of renewable energy companies, including Adani Green Energy, NPTC Green Energy and Acme Solar Holdings, were trading with losses of up to 5% on Friday, April 4.

Brokerage firm ICICI Securities has initiated coverage on these three stocks, with potential upsides of up to 74%. Within the renewables space, ICICI Securities already had Tata Power and JSW Energy under coverage.

The brokerage has issued ‘Buy’ ratings for Adani Green and Acme Solar, with price targets of ₹1,150 and ₹350, respectively, implying potential upsides of 20% and 74%.

It has assigned an ‘Add’ rating to NTPC Green, with a price target of ₹113, indicating a potential upside of 13%.

JSW Energy and Tata Power, which were already under coverage, also carry ‘Buy’ ratings, with target prices of ₹632 and ₹470, respectively.

ICICI Securities wrote in its note that energy transition is gaining momentum in India. The country has promised over 40% renewable energy (RE) penetration by FY30 and has set a target of net zero emissions by 2070.

Hence, a series of conducive steps have been introduced, such as renewable consumption obligations, reduced transmission charges for RE, and bidding plans totaling over 40 GW for FY24 and FY25. The undergoing transition is well rooted in the improving economics of renewable energy.

A decline in storage cost is further improving RE’s prospects while adoption of green hydrogen may further increase the total addressable market, the brokerage mentioned.

As a result, ICICI Securities expects accelerated investments in renewables, creating opportunities for RE power producers.

Indian RE companies are actively raising funds through IPOs to fund growth. Currently, three pureplay renewables are listed, with two being listed in the last six months.

According to ICICI Securities, the Indian renewables sector offers compelling investment opportunities. The brokerage expects growth to remain in the mid-teens for at least the next six years before stabilising as the sector matures.

It believes the long-term winners will have certain characteristics, including high capital efficiency, which can be best measured by the capex-to-EBITDA ratio.

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