KPI green is moving from high ROE CPP and EPC business to low ROE IPP (with lower tariffs).
The high ROE businesses are being moved to other group companies.
2 Likes
Why they are again giving bonus share any idea or to just increase liquidity?
bonus will not lead to long term appreciation - in short term it could jump…
company’s ROE will surely come down due to large IPP projects. this requires huge debt - for 1.2GW at least Rs 3,500 cr debt will be needed !!
this will reduce CPP/ EPC - which is high margin and low capital.
am sure such high valuation is not justified from IPP business.
One important point discussed by CFO on investor call - execution of projects… if there is delay in project execution it could impact profits.
also will there be penalties on delay in project?
Company’s business model was high margin CPP. The IPP business is a strategic mistake. they should use their land bank, evacuation infra, people etc fro CPP instead of IPP. I think it is the promoter’s desire to become a big player… this happens in most cases. till the time IPP was 30 to 40% it was ok but now it will be 70 to 80%.
3 Likes
KPI Green (electricity generation) and Waaree Renewables (EPC and O&M) are not comparable
But KPI Green also has EPC. Infact half of their order book is EPC (which is CPP) and the rest is IPP. You could say that KPI is more diversified but it definitely does EPC as well.
2 Likes
Rather IPP is much better where you will get annuity. The payback period is 7-8 years and then total 25 years it will be there. They are doing CPP also but that will not be story of long term but IPP will give revenue in long term as well and that is the best part in Kpi
3 Likes
As per their concall, order receipt in terms of GW for IPP and CPP are not comparable. While CPP is EPC activity and IPP is Capex based activity. So When IPP is commissioned, they sell the power and revenue stream starts thereafter. Revenue mix as of now is 15% IPP and balance CPP. When present order is commissioned, the revenue mix is likely to reach 30 / 70%, 30 being from IPP. They command better margin in IPP power sale.
Hope this clears the misconception vis-a-vis IPP Vs CPP
2 Likes
Bonus issue is a good sign as money moves from reserves to equity. Also it increases liquidity.
While KPI’s cost of equity is more than its cost of debt.----Can you please provide some data for same? What is their cost of equity vs cost of debt?
Even if the KPI is half EPC… margin profile of both EPC and IPP business are very different. Therefore, you cannot compare the two companies basis multiples.
KPI green was debt free as of last quarter… even before that leverage was low (as company has been raising equity at high valuation) … the subsidiary cant raise debt for the capex ? hard to believe…
corporate governance is clearly and issue here… but investors can make their own decisions…
even companies in the best industries have been affected due to Corp governance issues.
1 Like
Constant qips and splits its like almost with every result there is a split or preferential. At this point not sure management cares more about stock price or installing solar panels.
Disclaimer: Was invested
3 Likes
with so many IPOs (with high OFS) for solar companies it is evident that these companies are making hay while the sun shines !!
like everything else they will revert to mean… there is too much competition in solar business… there is risk of too much solar which can make grid unstable… then Govt may stop encouraging… but till then the party will continue…
4 Likes
How will this Adani saga of bribing state govts for solar installations allegations impact KPI green? Will it be positive or negative or non-event for KPI green?
I don’t think it will have any impact on KPI or any other solar company.
In India, most of the people know that bribery is not a big deal and businesses have to spent it but untill anything proves all good.
Now that the issue is serious and an arrest warrant is issued, Adani will go low profile until issue gets sorted and his efforts will be diverted away from business. Congress is gearing up with this for the upcoming parliamentary session. It will definitely impact solar deployments and solar companies - but who will gain and who will lose from this episode?
Imo, i think the space is getting crowded and everyone wants a pie of the opportunity by all means. So bad governance is not ruled out? only time will tell.
2 Likes
2 Likes
I read somewhere that they won the bid at Rs. 4 per unit for mixed (solar and thermal). it this high or low?
KPI Green has won tenders at 2.99 to 3.25 levels. i think this is low and not Rs. 4…