Comprehensive Analysis of KPI Green Energy Limited - The Renewable Power House

Summary

KPI Green Energy, operating as an Independent and Captive Power Producer, boasts a cumulative 346+ MW capacity and strong financials with INR 406+ Cr revenue and INR 68+ Cr PAT in H1FY24. Focused on sustainable growth, the company aims for 1000 MW by 2025, emphasizing innovation, transparent dealings, and a hybrid model combining solar and wind energy. Led by Dr. Faruk G. Patel, a renowned entrepreneur, the company's strategic positioning and commitment to innovation signify strong prospects in India's renewable energy landscape.

About the Company

KPI Green Energy Limited, operating in Gujarat, India, under the brand 'Solarism,' distinguishes itself as a dynamic force in the renewable energy sector. The company operates as both an Independent Power Producer (IPP) and a Captive Power Producer (CPP), showcasing a cumulative capacity of 346+ MW till H1FY24. With a total revenue of INR 406+ Cr and a Profit After Tax (PAT) of INR 68+ Cr in H1FY24, KPI Green Energy demonstrates strong financial performance. The company aims ambitiously to achieve 1000 MW by 2025, reflecting its commitment to growth and sustainability.

KPI Green Energy’s ethos revolves around a vision of “Powering India by the power of nature,” with a mission to accelerate the adoption of renewable technology across India. Their values emphasize ethical practices, transparency, environmentalism, equal opportunity, respect for diversity, and individual respect.

Geographical Presence

KPI Green Energy's robust presence in Gujarat is marked by 25 sites across multiple districts, including Bhavnagar, Kutch, and Bharuch, reflecting its strategic geographical positioning.

Performance Highlights

• Cumulative Capacity: As of H1FY24, the company achieved a cumulative capacity of 346+ MW, including IPP, CPP, and Hybrid models.
• Significant Orders: The company secured the largest hybrid CPP order of 145.20 MW and won a 240 MW DC bid from GUVNL, bolstering its total order book to 541+ MW.
• Capacity Energized: Till H1FY24, the capacity energized included 141+ MW under IPP and 205+ MW under CPP.

Financial Analysis

• Revenue and Profitability: The company reported a total income of INR 406.52 Cr in H1FY24, a 44% increase year-over-year.
• EBITDA Growth: EBITDA in H1FY24 stood at Rs. 142.50 Cr, a significant increase from the previous year.
• Profit and EPS: Net profit margin improved to 16.73% in H1FY24, with a notable rise in EPS to INR 18.82, indicating a strong profitability profile.
  
  

Balance Sheet Summary

• Net Worth: The net worth as of H1FY24 was INR 324.95 Cr, showing a 26% increase from FY23.
• Asset Growth: Fixed assets increased by 8% to INR 862.17 Cr, signifying reinvestment and expansion.
  
  
  
  

Key Ratios

Financial


Margins

Valuations


Key Business Strategies

• Growth Strategy: The company's growth strategy includes leveraging the increasing demand for renewable energy, strategic land acquisition, authenticity and transparency in business dealings, timely project execution, and venturing into the hybrid segment.
• Technological Advancements: KPI Green Energy employs bifacial solar panels, single-axis sun-trackers, robotic cleaning, and centralized monitoring systems to enhance efficiency.
• Hybrid Model: The hybrid model combining solar and wind energy underlines the company's innovative approach, aiming for cost efficiency and effective energy generation.

Market Statistics

• Market Capitalization: As of October 7, 2023, the market capitalization stood at INR 3266+ Cr.
• Shareholding Pattern: The company maintains a balanced shareholding pattern with a significant promoter holding, indicating strong founder confidence.

Future Prospects and Outlook

KPI Green Energy Limited is strategically positioned for robust growth in the renewable energy sector. Its commitment to technological innovation, strategic market positioning, and robust financial performance underpin its potential for sustained growth and value creation for stakeholders.

Management is led by Dr. Faruk G. Patel

(Chairman & Managing Director, Kpigreenenergy Ltd.)

Managing Director is the founding promoter of company. He is one of the highly acclaimed entrepreneurs and visionary corporate leaders of the city. From starting his business journey of establishing a small venture engaged mainly in logistics and construction of residential buildings in the year 1994 to become the founder and promoter of 35 companies with the brand name of KP Group engaged into various businesses mainly Solar, Wind, Hyrbid and Green Hydrogen Ammonia and Fabrication & Galvanising within a short span of time speaks volume about his business acumen and entrepreneurship. During his entire business career, he has always emphasized upon pecuniary as well as the social objectives, pursuant to which he has earned fame and social acclamation from the community and the fraternity. Considering his achievements and contributions made by him to the city, he has also been awarded as ‘Legends of Surat 2018’ by Gujaratmitra, ‘The Leaders Award 2019’ by Mantavya News and also ‘Business Icon 2018’ by Times Group. Currently, He is also the Managing Director on the board of our Wind vertical Group Company, viz ‘K.P. Energy Limited’. Lately he is also honored by the Honorary Doctorate by the American East Coast University, USA.

Industry Overview

India’s renewable energy sector

India’s sheer size and its enormous growth potential suggest that its energy demand is likely to grow at a faster pace than any other country in the years ahead. Prime Minister Narendra Modi has announced ambitious targets for 2030, which include reducing India's emissions intensity by 45% and lowering a billion metric tonnes of CO2.4 This has placed the nation on a pathway to net zero emissions by 2070 and it is anticipated that the substantial growth in energy demand this decade will have to be met with green energy sources.
The gradual depletion of conventional electricity generation methods such as thermal power plants, has also resulted in a surge in demand for renewable energy. The renewable energy market is rapidly expanding, supported by effective collaboration between the Government and private sectors. In India, solar and wind are the prevalent sources of renewable energy.
India’s combined capacity of installed renewable energy, not including large hydro sources, amounted to 125.16 GW during FY23.5 By FY27, it is predicted to increase to 287.34 GW, growing at a Compound Annual Growth Rate (CAGR) of 21.60%. The Indian government aims to achieve 450 GW of installed renewable energy capacity by FY30, with solar power contributing 280 GW (over 60%). By FY27, renewable energy is expected to account for almost 50% of the installed power capacity. Another factor contributing to the expansion of the renewable energy sector in India is the confluence of affordable financing and anticipated declines in solar and wind module costs which are leading to the decline in solar prices in the country. The adoption of a reverse
auction system for wind tariffs reflects the trend towards lower tariffs, facilitated by an extended high wind resource potential trajectory. The persistent reduction in renewable energy costs is also instrumental in developing a sustainable, domestically oriented energy system.
The increasing usage of electric vehicles (EVs), along with the rapid industrialisation and expansion of residential sectors, are expected to amplify the country's electricity demand. In this context, renewable energy sources will play a pivotal role in fulfilling this heightened energy demand.

Risks

> Securing land for the construction of transmission lines connecting solar power plants to the grid has ushered in numerous challenges.

>Intense competition from traditional and other renewable energy producers poses a substantial challenge to the Company’s prospects

>Implementing corporate strategies, such as diversification and expansion into new territories, as well as the development and adoption of novel technologies, proves difficult.

>The construction of solar power/Hybrid projects entails several risks and uncertainties

Analysis

With the increasing demand in Solar sector, growth of companies like KPI Green is at the formost. Under the management of Faruk Patel, In last 3 years companies sales grew at a CAGR of 122% and Profit at a CAGR of 157%. Now company with increasing capex and with increasing orders will perform better in upcoming years.

There are few risks involved with the company but since this is the sunrising sector and demand is super positive.