Finally someone (A pro) brings it up -
Must read - Specially the ’ Additional aspects of KPI Green Energy Ltd’ part of the article.
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So are you promoting bad corporate governance if KPI green follows it? There are several number of red flags which doesn’t put promotor in good light.
Hope no issues in tenders they have won… through competitive bidding…
No doubt there is corporate governance issues, but many other companies with such issues have shined. Take for an example CG power… But yes we need to be careful. The future for KPI green is bright and as long as no major surprises, the earnings growth itself will push KPI green upwards even if P/E stays the same or falls. Atleast my opinion.
Bull market valuation PE and bear market PE are not same, utility companies don’t command this kind of valuations, not talking for KPI only but whole sector. Lets see how things transform in future.
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Well I would not keep KPI as a utility compant only as it has an EPC part and a IPP which is kind of utility. Now this green premium is here to stay at least for the next few years. The EPC business should boost the intrinsic valuation at least. Now the P/E has come down to 41x and there is a lot of growth lined up. Companies that have such an order book should have great PEG ratios. But even if P/E has to correct, the growth that I believe should continue can help. In other words, even if PAT goes 10x in 7 years and valuations fall to 20P/E, it would still be a 5x from current levels.
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Hey guys, Green Energy is such a big theme and with huge capex requirement, can you guys think KPI will get acquired by big TATA JSW/ ADANI , only USP of KPI is land bank in GUJARAT !!
If i am not wrong NTPC green is also on same trajectory!!
I known, I should ask this for management but letting my thought’s here!
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Can someone summarize this paywall protected article please?
I am new to this thread here. I am really amazed by the high OPM of KPI green. Does anyone know the subsidy income of KPI in FY24? That might explain the high margins but I could not find the same from their PPT or transcripts
they are getting into IPP which is very low margin and high debt business… doesnt justify high valuations…
it will be interesting to see where the stock price goes from here… most likely will stagnate…
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IPP is a high margin business unlike CPP, margins should go up from here if IPP mix improves in overall revenues.
Disc- Invested
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Agree ! They will be getting fixed income now
IPP is fixed income but lower return and very large debt. Any increase in debt costs or reduction in electricity generation (for any reason) can lead to high decline in profits. it is leveraged play…
to my mind it does not justify the high valuations.
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Is there any negative news on KPI? it is on lower circuit.
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I have seen recent interviews with the promoters and everything looks bright for the next 5 years according to the order book and execution rates in hand. KPI has greatly rewarded its investors over the last 5 years. I see this correction as a way to cool off the inflated PE. The stock is now fairly valued and after great Q3 results, the share price shall attain its glory. No major red flags seen yet.
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The biggest red flag is corporate governance (CG) issues. Initially, when the company is small, we can ignore related party transactions (RPTs), balance sheet issues, and other CG problems, but this is a 10,000 crore market capitalization company. It should have focused on addressing CG issues rather than giving interviews on news channels every day. Their RPTs are high, and another red flag is that orders won by KPI Green have been given to other group companies. They are trying to increase liquidity every few months by issuing bonuses and stock splits. There is no doubt that the order book is strong and the company will grow, but in this market, we need to prioritize maintaining corporate governance above all else.
Plus they’ll need money to grow and hence we’ll see more fund raise in future or maybe a pledge or debt possibly
Disc - Exited fully recently after it breached its support level and made good 4.5x in 1.5 years
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I feel CG issues are taking over the growth. No other reason I could found. We kept on holding because of technicals but booked fully after it breached its support level
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Art of selling is most difficult part of market
Waaree is not falling much - it is in line with market fall… but KPI is hitting continuous lower circuit.
Is there any negative news?
like i have been pointing out earlier it could be due to getting into IPP projects and plans to take large debt (4,000 cr debt !!)… its going to be leveraged low return business… Cost of panels are already going up due to import duty, interest rates can go up (which are likely due to high inflation) - whatever can go wrong is going wrong… and the biggest risk if of generation. if that comes down then it will be in loss forget profit… in the CPP business tariff is double of IPP business and can sustain these shocks but KPI is more of IPP company now…
Also could be Corporate governance issues… i hope not or else it can go much lower from here…
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