KPI Green- Turning Sunshine Into Cashflows

Well, what might seem like glossing over might often be a trade secret that not just KPI green energy but many other companies that outperform their peers have too. I feel a few reasons might be -

  • Backward integration with KP Energy Ltd. and KP buildcon
  • Doing Both IPP and CPP under one roof provides benefits of scale
  • Dynamic Contracts which ensure price protection
  • Gujrat being their only focus and having the best sun days improves their productivity drastically
  • Price per unit charged is slightly below the market average giving them more orders which in turn
    helps operational leverage to kick in.
  • Speed of execution leading to better pricing power in CPP projects.

I think you should contact the company for better clarity on all the WHYs, will definitely bring in more clarity of thoughts, not saying that you are wrong but knowing more is always better.


Which from below could be trade secret that they couldn’t disclose?

As I said earlier it should be a trade secret and being a trade secret it isn’t public and I haven’t bothered to know either as my on-ground research and forensic accounting have given me enough conviction of no wrongdoing. Can’t share every resource as it’s time-consuming to find where exactly I found what but about the speed it was about in the last con call and their cash conversion cycle says it, Please go through that and I think you should get in touch with the company secretary for better clarity as almost all companies do not publicly disclose such information.


The company informs that they have received new orders aggregating to 9.70 MW capacity for executing solar power project, out of which 4.70 MW capacity undertaken by KPI Green Energy Limited (‘the Company’) and 5 MW capacity by M/s. Sun Drops Energia Private Limited, is a wholly-owned subsidiary of the Company under the ‘Captive Power Producer (CPP)’ Segment of the Company.


The company proved my assessment right in their AR, Please go through page 25 for better clarity -

Nothing shady for sure.


In Yesterday’s downfall promoters bought 6100 share at 805 cmp
What dose it says…


If you look past history, the promoter bought multiple times…since 2019, I can see 3.72% increase in holding by promoter


Today the have completed commissioning one big project…
Next Quarterly result will be interesting to see…

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Intimation of commissioning of 7.80MW Wind-Solar Hybrid Power Project comprising of
4.20MW wind and 3.60MWdc solar capacity under CPP segment

Extracts from Annual Report of the Company for the Financial Year 2022-23







Snippets from AR

Through bilateral Power Purchase Agreements (PPAs), we supply the
electricity produced by our solar power plants to renowned business houses.

Companies reduce their electricity costs through captive solar
plants, whose cost per unit is lessthan that from DISCOM.

Hybrid Model : We have ventured into a hybrid
model of solar and wind energy,
which helps with grid stability.
The hybrid model brings both
solar and wind energy together
to provide a more reliable,
efficient and sustainable
approach to renewable energy
generation. This model also
enables the commercial
optimisation of transmission
charges and the effective
utilisation of grid capacity. We
have added new locations and
increased our capacity from 165
MW to over 300 MW. Our aim is
to enhance this hybrid model in
the future, as it is very beneficial
when it comes to cost efficiency
or effective energy generation.

Technological Insights → Bifacial solar panels

Bifacial solar panels help us generate
electricity from both sides of the
modules by capturing sunlight from
the front and reflected light from
the rear side. They provide us with
higher energy yields, as compared
to the mono-facial panels and we
carefully plan their layout and design
to maximise the benefits

Single axis tracker →
We use single-axis trackers to
optimise the efficiency of solar
panels by maximising their exposure
to sunlight throughout the day. A
single-axis tracker is a device that
allows solar panels to follow the
trajectory of the Sun from the East
to West, as the Sun moves across
the sky. This tracking capability
enables the solar panels to maintain
an optimal angle relative to the sun,
which results in an increase in energy
generation by more than 15%

Management Discussion :

India’s renewable energy sector
India’s sheer size and its enormous growth potential
suggest that its energy demand is likely to grow at a faster
pace than any other country in the years ahead. Prime
Minister Narendra Modi has announced ambitious targets
for 2030, which include reducing India’s emissions intensity
by 45% and lowering a billion metric tonnes of CO2.4 This
has placed the nation on a pathway to net zero emissions
by 2070 and it is anticipated that the substantial growth in
energy demand this decade will have to be met with green
energy sources.

In India, solar and wind are the prevalent
sources of renewable energy. India’s combined capacity of installed renewable energy,
not including large hydro sources, amounted to 125.16
GW during FY23.5 By FY27, it is predicted to increase to
287.34 GW, growing at a Compound Annual Growth Rate
(CAGR) of 21.60%

The Indian government aims to achieve 450 GW of installed renewable energy capacity by FY30,
with solar power contributing 280 GW (over 60%). By FY27,
renewable energy is expected to account for almost 50%
of the installed power capacity.

Another factor contributing to the expansion of the
renewable energy sector in India is the confluence of
affordable financing and anticipated declines in solar
and wind module costs which are leading to the decline
in solar prices in the country. The adoption of a reverse
auction system for wind tariffs reflects the trend towards
lower tariffs, facilitated by an extended high wind
resource potential trajectory. The persistent reduction in
renewable energy costs is also instrumental in developing
a sustainable, domestically oriented energy system.




KPI Green Energy Limited has been awarded a Letter of Intent (LOI) for a 145.20 MW Wind-Solar Hybrid Power Project (comprising 145.20 MW Wind and 50 MW Solar) by M/s Ayana Renewable Power Four Private Limited, based in Bangalore. This project will be located in the state of Gujarat and falls under the Company’s ‘Captive Power Producer (CPP)’ business segment.

Can turn out to be a huge boost to the company’s goal of reaching 1000 MW by 2025 if the LOI is materialized.


Concall notes, Q4 FY23

Project Milestones

  • Commissioning of First Hybrid IPP Project (16.1 MW wind + 10 MW solar) in March '23
  • Cumulative Energized Capacity: 137+ MW (up to March '23)
  • Cumulative Capacity under CPP: 175+ MW
  • Total Capacity: 312+ MW

Historic Achievement

  • Commissioning of Seventh Turbine under Hybrid Policy in South Gujarat
  • Opening New Markets for Wind Energy in South Gujarat

Financial Highlights

  • YoY Revenue Growth: 179%, INR 231.51 crores to INR 647.03 crores
  • Quarterly Revenue Growth: INR 179.66 crores to INR 184.41 crores (Q3 FY22-23)
  • YoY EBITDA Growth: 91%, INR 110.35 crores to INR 211.25 crores
  • EBITDA Margin Change: 47.6% to 32.65%
  • YoY PBT Growth: 139%, INR 59.76 crores to INR 141.87 crores
  • YoY PAT Growth: INR 43.25 crores to INR 109.63 crores

Segment Analysis

  • IPP Segment: Energized 36+ MW, cumulative capacity of 137 MW
  • 26.1 MW hybrid IPP project capitalized in Q4 '22-'23, revenue accrual in FY23-24
  • CPP Segment: Energized 111 MW, cumulative capacity of 175+ MW
  • IPP Orders: 42 MW, CPP Orders (including hybrid): 74 MW

Sales Growth

  • Consolidated Sales of Captive Projects: 225% growth, INR 168.39 crores to INR 549.97 crores
  • IPP Segment Sales: 64% growth, INR 57.59 crores to INR 94.73 crores
  • Revenue Mix Shift: CPP vs. IPP changed from 75:25 to 85:15, impacting overall margin

Operational Cash Flows

  • Net Cash from Operating Activities: 56% increase, INR 102.38 crores to INR 159.38 crores


  • Total CAPEX during FY22-23: INR 266.27 crores
  • Funding Mix: Debt (INR 159.75 crores) and Internal Accruals (INR 106 crores)
  • Debt-Equity Balance: Maintained at approximately 2:1

Average Realization for CPP Projects per MW

  • Average Realization: Approximately 4.25 to 4.50 crores per MW

Average Cost of IPP Projects per MW

  • Average Cost Factors: Size of the project, transmission voltage (11 kV or 66 kV), and infrastructure
  • Cost Range: Approximately 3.75 to 4.10 crores per MW

Average Cost of Land

  • Current Land Capitalization: Approximately 82.80 crores on the consolidated books
  • Plant valuation is around 700 crores
  • Ownership: Majority of the land is owned, with a total land bank of 1,347 crores, out of which 700 crores is owned land.

FY24 Targets for IPP and CPP

  • Minimum Growth Target: 50% to 60% in both IPP and CPP segments
  • No Ceiling: Opportunity to exceed targets if better deals are secured
  • Aiming to Add 25 to 50 MW this year in both segments
  • Long-term Goal: Achieving 1 GW (1,000 MW) by 2025

Expectations for CPP Orders

  • Current CPP Order Book: 109 MW (approx. 430 crores)
  • Additional Orders in Pipeline: Expected to be finalized in the coming months

Long-Term Annuity Income

  • Annuity Income for CPP: Rs. 10 lakhs per MW, totaling Rs. 100 crores for 1,000 MW
  • Revenue for IPP: Anticipated revenue increase from Rs. 100 crores to Rs. 250 crores
  • Average Annual Annuity Earning for IPP: Rs. 75 crores
  • EBITDA Expected to be 74% of the annual annuity income

IPP Policy:

  • Validity: The IPP policy is currently in effect and will remain so until December 31, 2025.
  • Policy Type: Under this policy, the company operates its IPP projects following an open access policy. Open access allows power producers to supply electricity directly to consumers or through the grid, ensuring fair and non-discriminatory access to transmission and distribution systems.

Hybrid Policy:

  • Expiry Date: The existing hybrid policy, which allows the company to generate power from multiple sources like wind and solar, is set to expire on June 18 of the current year.
  • Expectation: The company anticipates that a new hybrid policy with extended benefits will be introduced after the current one expires.

Advantages of the Hybrid Policy:

  • Under the hybrid policy, the company enjoys several benefits:
    • Monthly Power Banking: This allows them to save power for future use, enhancing operational flexibility.
    • Selective Transmission Cost: Transmission costs are incurred only for the leading power source. For example, if wind power takes the lead, transmission costs are applied only to wind-generated electricity.
    • Higher Plant Load Factor (PLF): Wind projects tend to have a higher PLF compared to solar projects, contributing to better financial performance.

Revenue Mix Between CPP and IPP:

  • The current revenue mix between CPP and IPP is 85% CPP and 15% IPP.
  • The company’s revenue mix strategy takes various factors into account:
    • Capital Intensity: IPP projects require significant capital investment.
    • Leverage Ratio Maintenance: The company needs to maintain a healthy leverage ratio to preserve its credit ratings.
    • Tax Planning: Tax considerations play a role in determining the revenue mix.
    • Free Cash Flows: Adequate free cash flows are essential for decision-making.
  • The company expects the revenue mix to remain similar in the near term, but adjustments may be made based on factors like cash flow generation.

Differentiation Between Solar, Wind, and Hybrid Projects:

Performance (PLF):

  • Solar PLF (Plant Load Factor): Approximately 26-36%.
  • Wind PLF: Around 36%.
  • Hybrid PLF: Combined solar and wind, approximately 48% (weighted average).

CAPEX (Capital Expenditure):

  • Solar CAPEX is relatively lower.
  • Wind CAPEX is higher due to higher generation potential.

Payback Period:

  • Solar Payback: Typically shorter, around 5-7 years.
  • Wind Payback: Longer, around 15-18 years.
  • Hybrid Payback: Estimated to be around 5-7 years.

Average Cost of Debt:

  • Rate: The average cost of debt on the company’s books is approximately 9%.

Loan Tenure:

  • Duration: The tenure for the company’s term loans, including capital-intensive loans, typically ranges from 10 to 13 years. This means the company plans to pay back these loans over this period.

Unique Selling Proposition (USP) and Key Differentiators:

  • Profitability: The company stands out in the renewable energy sector by consistently generating good profits while many other unlisted renewable companies are facing losses.
  • Margins: The company maintains healthy profit margins, differentiating itself from peers in both the IPP (Independent Power Producer) and CPP (Captive Power Producer) spaces.
  • Transparency and Legal Compliance: A key USP is the company’s commitment to transparency and adherence to legal and regulatory standards. The company emphasizes conducting its business in a clear and legally compliant manner.
  • Business Diversification: The company’s unique approach involves operating in both IPP and CPP segments, making it distinct from its peers. This dual business model contributes to its profitability.
  • Efficiency and Speed: The company prides itself on its ability to complete projects swiftly, often in three to six months, compared to industry averages of 18 months. This efficiency contributes to higher customer confidence and order flow.
  • Pipeline Preparation: The company’s forward-looking strategy involves preparing its project pipeline several years in advance, ensuring a steady flow of projects and orders.
  • Customer Trust: The company’s strong reputation and track record have earned the trust of its customers, leading to consistent order placement and business growth.

Project Size Flexibility: The company can handle projects ranging from 1 MW to 30-40 MW on the CPP side, offering flexibility in project sizes.

Funding Working Capital: Working capital for CPP projects is partially covered by clients’ advanced payments, supplemented by the company’s capital for inventory stocking.

O&M Costs: The annual O&M cost per megawatt is approximately 2 lakhs.

Revenue from O&M (CPP): Clients are charged 5 lakhs per MW annually for O&M services, contributing to revenue.

Mitigating Performance Risks: The company assures an 85% generation guarantee for CPP projects, minimizing performance risks. Some projects have warranties until 2030, further reducing risks.

RFP Certificates Realization:

In 2022-23, the company realized approximately Rs. 25-30 lakhs from RFP certificates. These certificates mainly pertain to 7 kW projects that are in the registration process.

Loan Assistance for IPP:

As of March 31st, the loan assistance for IPP stands at 409 crores.

Stock Panel Management:

The company maintains stock panels for various purposes. While they do not generate revenue from their own CPP and CAPEX, they aim to take advantage of price fluctuations and market conditions.

Impact on Margins:

Maintaining lower stock levels aligns with the goal of securing favorable margins and obtaining discount rates.

Order Book Status:

As of 2022 year-end, the order book exceeded 100 MW, and currently, in 2023, it stands at 116 MW. While the difference is slightly lower than anticipated, the company has a substantial order pipeline for IPP, which they cautiously consider based on immediate CAPEX plans.

CPP Volume and IPP Margins:

The company focuses on CPP projects for volume growth, while IPP projects contribute to higher margins and profitability.

Competition within Group Company (IPP Segment):

KPI Energy’s entry into the IPP segment won’t create competition within the group as they target different customer segments.

Expansion Beyond Gujarat:

The company plans to expand to other states, including Telangana, Rajasthan, MP, Maharashtra, and Karnataka.

Business Dealings with Tristar Transport:

The company collaborates with Tristar Transport on green hydrogen projects, leveraging Tristar’s expertise in hydrogen logistics in the UAE.

Difference in Margins (CPP vs. IPP):

  • CPP (Captive Power Producer): Lower EBITDA margins (approx. 30-35%) due to competition, changing rates, and shorter-term contracts.
  • IPP (Independent Power Producer): Higher EBITDA margins (approx. 70-75%) as it’s a CAPEX-based business selling energy, offering stable and long-term returns.

Debt Status:

  • Debt-to-Equity Ratio: Currently at 2:1, considered healthy for a capital-intensive industry.
  • Debt Management: Plans to maintain a similar ratio in the future.

Expansion Plans:

  • Scaling Up: Exploring opportunities to become a larger player, aiming for projects with sizes like 250 MW in government tenders.
  • Dedicated Team: A separate team is actively pursuing such opportunities.

Bengaluru-based firm Ayana Renewable Power Four has awarded a commercial letter of intent (LoI) to KPI Green Energy for the development of a 145.20 MW wind-solar hybrid power project.

The company’s captive power producer (CPP) business segment is strategically placed in Gujarat. The project includes 145.20 MW of wind and 50 MW of solar.

Source: KPI Green Energy awarded LoI to develop hybrid power project

A new order of 7 MW has been received, which I estimate should be worth around 30cr.

Follow up -
Another order of 6.9 MW is in


Wondering why the debt to equity is > 2. No guidance on reducing the debt given so far if i am not mistaken.


Yes me too.
I also wanted to understand another listed company of same promoter Kp energy.
What is synergy between 2 …

They mostly mostly fund their commission of new solar plants through debt. But their interest coverage ratio has been increasing from 2.59(FY22) to 4 (FY23) .So debt will not be a issue here as long as they are able to serve the interest.

There was a guidance given which probably you missed out on, also debt at 9% is quite reasonable. Most of the loan is from SBI where a few months back they offered KPI Green better interest rates compared to 11%+ of the previous bank so KPI Green switched to SBI.

Credit rating which is in ‘A category’ as this particular industry is capital intensive and 2:1 is considered good.

Disclosure - Invested

KPI Green posted a good set of Q2FY24 numbers. The order book looks decent in terms of future growth.

  • Revenue grew 34% YoY and 14% QoQ

  • PAT grew 67% YoY and 6% QoQ

  • PAT margin declined a bit QoQ but is stabilizing in the range of 15%-17%

  • 346+ MW projects executed so far till H1FY24

    • 313+ MW cumulative projects executed till FY23
    • 33+ MW projects executed in H1FY24 alone (10% of total execution till FY23)
  • 541+ MW total orders in hand (1.56x of total orders executed so far, )

    • 385+ MW new orders received in H1FY24 (1.1x of orders executed till H1FY24)
      • Consists of two big orders: 240 MW under GUVNL tender and 145 MW from Ayana Renewable Power Four Pvt Ltd
    • 156+ MW backlog until H1FY24
  • 887+ MW orders already secured out of 1000 MW target by 2025

    • Only need 110+ MW additional orders to hit the target (looks very much possible!)
  • ICRA reaffirmed A- (Stable) credit rating for long term at an enhanced rated amount

  • Segments:

    • 18% revenue share of IPP (vs 22% in Q1FY24)
    • 82% revenue share of CPP (vs 78% in Q1FY24)
  • Unit generation growth under IPP is steadily increasing

  • Increasingly moving towards hybrid model (solar + wind energy) which help grid stability due to reliable, efficient and sustainable approach to energy generation. It enables commercial optimization of transmission charges and the effective utilization of grid capacity.

    • 145+ MW hybrid CPP orders received during Q2FY24
    • 185+ MW hybrid CPP orders as on H1FY24