In the Union Budget 2022, the finance minister Nirmala Sitharaman announced a host of incentives to boost infrastructure and manufacturing in the country to achieve growth in the economy. The ‘Make in India’ mission is gaining a lot of traction and several production-linked incentive schemes have also been announced in this regards. But what all these manufacturers will need in common is energy, be it in any form. Hence, in this article, we’ll look at the best energy stocks in India from an investing point of view.
Best Energy Stocks in India to Invest in
Given below is the list of some best power stocks in India to invest in
| So No | Stock Name | 5 Year CAGR (%) |
|---|---|---|
| 1 | Indian Energy Exchange Limited | 12.62% |
| 2 | Adani Green Energy Limited | 55.83% |
| 3 | Coal India Limited | 4.46% |
| 4 | JSW Energy Limited | 4.23% |
| 5 | National Thermal Power Corporation Limited | 8.71% |
| 6 | Power Grid Corporation of India Limited | 14% |
1. Indian Energy Exchange Limited
Indian Energy Exchange (IEX) Limited is a monopoly business in India which is involved in spot trading in power and electricity, and trading of renewable energy certificates and this is one of the best energy stocks in India The company has a market share of 95% in this segment. Besides power, the company also owns and operates a gas exchange, called IGX.
The growing demand for renewable energy will result in an increase in trading of power and gas on its platforms. The power trading volume on IEX’s platform has grown at a CAGR of 32% since 2009. This indicates the growing demand for power trading in India. Besides, the company operates on an asset-light model. The company has grown its revenues at a CAGR of 12.62% over the past five years, while net profits grew at a CAGR of 16.35% over the same tenure.
| Market Cap | ₹14356 Cr |
| P/E | 47.46 |
| P/B | 20.45 |
| Sales Growth | 23.38% |
2. Adani Green Energy Limited
Adani Green Energy Limited is a flagship company that comes under the Adani Group and is engaged in the business of generating renewable power and other ancillary activities. It is one of the largest renewable companies in India with a project portfolio of 13,990 MW. The company has 54 operational projects and 12 projects under construction. It develops, builds, owns, operates, and maintains grid-connected solar and wind farm projects.
The company has grown its revenues at a CAGR of 157.47% over the last five years while profit after tax grew at a 55.83% CAGR over the same tenure. But the company had a debt/equity ratio of 10.85 as of FY21.
| Market Cap | ₹311048 Cr |
| P/E | 0 |
| P/B | 50.83 |
| Sales Growth | 98.32% |
3. Coal India Limited
Coal India Limited was incorporated in the year 1973 under a full ownership of the Government of India. The company accounts for 80% of India’s coal production and is the largest coal producer in the world.
The company has 18.9 billion tonnes of proven reserves and 22.3 billion tonnes of extractable coal reserves. This implies a reserve life of 35-40 years, which is significantly higher than its global peers. Over the last five years, the company has grown its revenues at a CAGR of 4.46%, while net profits grew at a 3.35% CAGR over the same tenure. The company has a high dividend yield of around 10%.
| Market Cap | ₹112932 Cr |
| P/E | 10.08 |
| P/B | 6.9 |
| Sales Growth | -21.57% |
4. JSW Energy Limited
JSW Energy Limited is engaged in the generation of power from its power assets that are located in Karnataka, Maharashtra, Nandyal, and Salboni. The company presently has six electricity projects across India with a total capacity of 4559 MW of power.
Presently, the company has entered into long-term power purchase agreements for 81% of its capacities, while the remaining is being sold on short-term contracts. Over the past five years, the company’s revenues have de-grown at a CAGR of 4.23%, while profit growth was modest at 1.33% CAGR over the same tenure.
| Market Cap | ₹33579 Cr |
| P/E | 58.93 |
| P/B | 2.49 |
| Sales Growth | -32.83% |
5. National Thermal Power Corporation Limited
National Thermal Power Corporation Limited is engaged in the generation and sale of bulk power to state power utility companies. The company is also involved in operations such as energy trading, oil and gas exploration, and coal mining.
The company has a 22% share in electricity generation in India. Over the past five years, the company has grown its revenues at a CAGR of 8.71%, while net profits grew at a CAGR of 6.07%.
| Market Cap | ₹136383 Cr |
| P/E | 9.22 |
| P/B | 1.07 |
| Sales Growth | 1.33% |
6. Power Grid Corporation of India Limited
Power Grid Corporation of India Limited was incorporated in the year 1989 and is engaged in the planning, implementation, operation, and maintenance of Inter-state transmission system. The company is a public-sector undertaking owned by the government.
Over the past five years, the company has grown its revenues at a CAGR of 14%, while net profits grew at a CAGR of 15.13% over the same tenure. The company had a debt/equity ratio of 2.60 as of FY21.
| Market Cap | ₹144043 Cr |
| P/E | 8.18 |
| P/B | 1.89 |
| Sales Growth | 4.09% |
Conclusion
Discussed above was the list of best energy stocks in India from an investing view point. In recent times, there has been an increased focused on renewable forms of energy such as wind, solar, tidal, etc as India plans to become net-carbon neutral by the year 2070. However, investors should do their due diligence in further analyzing the company fundamentals and corporate governance before investing their hard earned money in these stocks at current valuations. Some of these companies may also have high debt/equity ratios which might become a riskier investment for investors.
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