Ujaas Energy - Value Migration to Solar Power

A good article on why the Indian companies will move to set up their own captive solar projects before June 2017…Very positive for companies such as UJAAS

https://cleantechnica.com/2017/01/16/cheaper-solar-power-allows-indian-companies-dump-utility-supply/

How do EPC players compete against each other? This is an extremely commoditized service and hence there will be a lot of competitive bidding going forward which will significantly impact the margins of the player. there is no dearth of EPC players in India. I think the only thing that can differentiate is low cost. How does Ujaas compete against peers in this area like Sterling, Mahindra, Rays, L&T etc.

Also I hear from the market that many companies are building panels in house and hence EPC contracts going forward would reduce. How does Ujaas plan to cope up with this. Will they venture into generation and owning assets?

India expected to 8.9 GW solar capacity in 2017, almost twice that added in 2016

Heard from a source that govt might withdraw subsidies on solar industry. Anybody with any info.

BS Link mentions
"Solar subsidies likely to end, sops for manufacturing on anvil
Government is moving fast to give direct subsidies to solar panel manufacturing
Shreya Jai | New Delhi
January 24, 2017 Last Updated at 02:22 IST
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The Union government’s plan to subsidise solar power panel manufacturing may come at the expense of solar power generation. The Centre is planning to do away with the subsidy schemes for the solar power sector — from rooftop to central financing assistance in several projects. Deliberations over this are in an early stage. However, the government is moving fast to give direct subsidies to solar panel manufacturing. During his visit to the United Arab Emirates, Piyush Goyal, minister of state for coal, power, mines and new and renewable energy, …"

if correct it means companies like “swelect energy” which has its own manufacturing of 100 MW will be benefited.
I am not sure how it will impact on companies like Ujjas ( which mainly imports from china) for their EPC & SOLAR Park business.

www.dsij.in/productattachment/.../UjaasEnergy_BUY_Wallfort_21.12.16.pdf

Link to a research report (INITIATING COVERAGE) By wallfort financials on Ujaas energy.

The link is not working …
can you pls copy paste the article here …

Hi
@sharrmasks http://forum.valuepickr.com/users/sharrmasks
The PDF research report says runtime error…Can you save and post it as PDF
pls

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Ujaas FY17 Q3 results…Another blockbuster result. NP more than triples in Q3.

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/06F721BD_C628_45F6_B619_C61EE09F2B05_192458.pdf

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Stock down even after posting decent set of results. Anyone having any views.
I believe we need to compare this year with FY14 which was a block buster year for company.
PAT For FY14 was 37.39 cr. Stock reached high of 41 around that performance. Company has delivered 25 cr profit in 9 months. In last quarter of FY 14 company had windfall profit of 20 cr.
If the same performance is repeated in Q4 then corresponding target for company would be around 50 levels.
More importantly the accelerated depreciation is comping to an end by March. There was no clarification on extension of the same in Budget. Any one has any idea on the same as that will trigger large orders in Q4 however, overall impact on long term orders for tax benefits will reduce significantly going forward.

@tarunkjain

Good post. I remember reading somewhere the accelerated depreciation is
extended till June 17, which is good. And the solar power is now becoming
better than grid parity prices of thermal power. So, there is no need for
any govt benefit. The latest per unit solar power costs quoted in india is
below Rs 3 per unit. Simply solar becomes very attractive at Capex and opex
levels compared to grid power. It is far better compared to DG sets ( Rs 15
to rs 5 - 6 ). Even if companies stop having DG sets and start using solar
plants as secondary power, it is still a huge benefit for them. And that
itself is a huge market for solar epc companies…

bright future of solar energy

“The decline in installations in 2017 will be driven by a number of negative events all hitting at once. There was an urgency that drove a boom in installations in 2016 when the investment tax credit (ITC) in the U.S. was set to expire, but the extension in late 2015 took away any urgency for utilities to sign solar contracts for 2017. Long-term, the extension will lead to more solar installations, but not until the 2018-2021 timeframe.”

Is any news over this counter…
correction of almost 20% … in two days…
If anyone has come across any news…please enlighten

Thinking on same lines. Something is amiss. Market is knowing something
which common investors like us do not know.

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somebody on moneycontrol saying …bids for solar power at 3.5rs per unit in ongoing auction in MP…is the reason…

i doubt if this is the only reason

While I do not have any news on the company, there could be a few reasons why this is correcting.

Although the solar market is increasing manifold, most of the players have started doing in house EPC which has increased from 30% in 2015 to 50 % in 2016. The trend is expected to go in the same direction.

At the same time, there are a lot of players who have entered the market and are bidding aggresively for the projects. The effect of this can be seen in the margins which have been declining.

Also lower capex costs for solar (which again are expected to decline further) acts as a double whammy as it reduces their topline. So topline reduction and margin compression are happening simultaneously.

It will be interesting to see how they ramp up their rooftop business though.

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Low bids for solar auction is actually a great news for Ujaas. Since they
majorly do EPC ( a little more than 50% ) and the balance as power
solutions ( do not sell power). People say that solar bids are falling due
to capex costs ( cells/modules etc ) falling. So, it will be cheaper for
companies to put up solar power as the capex for cos are to go down too.
And the RoI will still look good inspite of lower solar tariffs. Is it a
good entry for people who missed out price of Rs 20 odd a year back. ???

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But look at the potential for volume growth…It is humongous and
unimaginable, even though costs per MW will be down. Solar is becoming
cheaper than grid parity…Why should anybody put up theermal plants from
now on incrementally. If you look at the loan books of PFC and REC, close
to 50% of the incremental book is for renewables…

Such a big crash at such high volumes is concerning. Makes it seem like some news is about to drop that the public is not aware of yet.