If you’re looking for a new investment opportunity, the green energy sector might be worth considering. Recently, India’s Prime Minister Narendra Modi inaugurated the ‘Global Renewable Energy Investors Meet and Expo’ in Gujarat, where several big announcements were made regarding the green energy sector. This signals a growing push from the government towards sustainable energy, which has already been performing well in the stock market. Investors and analysts are now eyeing this sector for potential opportunities.
Green Energy Stocks Outperforming the Market
Green energy stocks have been doing exceptionally well this year. On average, stocks in this sector have returned around 80% to investors, which is much higher than the general market. For example, the BSE Power Index has surged by 44%, compared to a 16% rise in both Sensex and Nifty during the same period. This clearly indicates that the green energy sector is currently outpacing other areas of the market. Companies like Wari Renewables, Suzlon Energy, and Inox Wind have delivered some of the highest returns this year.
Government Push Towards Renewable Energy
At the event in Gujarat, Union Minister Prahlad Joshi revealed the government’s target to produce 500 GW of renewable energy by 2030. To achieve this goal, investments worth Rs 32.45 lakh crore have already been promised by banks and financial institutions. With this kind of backing, the future of green energy looks very promising.
Why Green Energy Is Gaining Momentum
Experts are saying that the demand for green energy, particularly in solar panels and modules, is growing rapidly. India’s ambitious goal of becoming carbon neutral by 2070 is driving this growth. The focus on reducing carbon emissions is encouraging both local and global investors to pour money into this sector.
What Experts Are Saying
Ankit Jain, Senior Fund Manager at Mirae Asset Investment Managers, says that the shift towards sustainable energy solutions is not just a local trend, but a global one. The decreasing cost of renewable energy combined with supportive government policies is making this sector more attractive to investors. Power Purchase Agreements (PPAs) ensure that the income of these companies remains stable over the long term, which makes them a safer investment option.
On the other hand, Rupesh Sankhe from Elara Capital points out that a large number of tenders are being issued every year in the renewable energy space. This is good news for companies that have a solid financial foundation. Even mid-cap companies are benefiting from this trend, though many stocks are currently trading at high valuations, which makes timing your investment crucial.
Proceed with Caution Despite Growth Potential
Although there’s a lot of optimism around green energy, experts warn that investors need to be cautious. Stocks in this sector are trading at high valuations, which means you might be paying a premium for these shares right now. Prasanna Bidkar, Portfolio Manager at Paterson PMS, adds that while the renewable energy capacity has grown 30 times in the last few years, future growth might not be as fast because the base has become much larger.
Additionally, technological changes could disrupt some companies in this sector. For example, the cost of solar panels has been falling rapidly, and some companies have struggled to keep up with this shift. Prasanna warns that while many expected rooftop solar demand to boom, it hasn’t taken off as expected in some states where consumers already pay little to no money for electricity.
Which Green Energy Stocks Are Worth Considering?
Despite the challenges, many experts believe there’s still plenty of room for growth in this sector. Nirav Karkera, Research Head at Fisdom, suggests that Adani Green, NTPC, Tata Power, and Wari Renewables are some of the stronger players in the green energy space. He particularly likes Tata Power and NTPC because they have a balanced presence in both conventional and renewable power sectors, which offers stability.
While it’s clear that green energy stocks have been a hot commodity this year, the sector’s long-term potential depends on both government policies and technological advancements. However, given the global push towards sustainability and India’s aggressive renewable energy goals, it might be worth exploring investment opportunities in green energy – with caution.
