Ujaas Energy - Value Migration to Solar Power

Ujaas receives a big order for 5.5MW of solar project from MOIL. At current
per MW rates this project should be worth between Rs 25 Cr - Rs 28 Cr
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/e3db81c0-798f-463e-9cb8-68b3c5c908b5.pdf

Hi, I’m a newbie to stock market. Can someone tell why its share price is going down monotonically even after getting large orders? In March end when they got two orders worth 1.3MW, it rose 5% but ever since it is only going down. Even today when the market is at an all time high, Ujaas has again gone down by 2% in the morning session. I believe Valuepickr does not allow discussions on price movement as such, but I’d like to know whether there is any underlying reason for this contrary movement in share price.

Updated on 3/June/2017:
Please be informed that UJAAS has received order from Hindustan Aeronautics Limited for Design, engineering, manufacturing/procurement, supply, construction, erection, testing and commissioning of 15 MW(AC) ground Mounted Solar Power Plant at HAL Ojhar Township, Dist. Nashik, Maharashtra.

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/45e5d6a8-4ecc-47e0-8320-456c66c7c246.pdf

Please go through Yogesh’s reply to a similar question before

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Hi Aswin - To make good gains in the market one need to digest the erratic
stock price movements in the short term. Such short term erratic movements
may be the best buying opportunities. I believe Netflix which is a darling
in Nasdaq now had a big fall in 2012 - 13 and in one day it fell
40%…Investors who stood firm in such falls have gained tremendously in the
long term…Such volatility is just not an Indian phenomena…

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Ujaas receives a 15 MW order. This is a big one and it should be approximately Rs 70 Crores worth…The receipt of order are now increasing to tens of MWs from tens of KW…Good sign

http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/45e5d6a8-4ecc-47e0-8320-456c66c7c246.pdf

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As per latest concall they have given a guidance of 150 MW for FY18 as against 81 MW exucuted during FY17.
They had an order book of 20 MW and a bid book of 75-80 MW on the day of concall. This order of 15 MW will certainly help them in reaching 150 MW figure.

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Any reason why Ujaas is on such a downtrend despite so many orders coming its way ? Is it still because of the drop in operating margin or something else ??

Fundamental seems to be intact, not sure why market is not giving it’s due to Ujaas. Is there some manipulation happening here?

These could be the reasons:

  1. Promoter selling 8% is the obvious #1. It shows the promoter himself doesn’t value his stake.

  2. Why didn’t the promoter raise capital via some form of debt or even a dilution using preferential allotment or Warrants as is the norm?

  3. The promoter could have even pledged shares to raise capital! It would have far less impact on the share price than what has happened now but he decided to sell.

  4. Solar tariff drops affecting margins. The recent margin drop to 12.58% doesn’t inspire confidence.

  5. AD and GBI removal. For a small EPC player like Ujaas, a bulk of the orders should have been driven by these policies which the govt. decided to ditch.

  6. Power sector headwinds - Why so much power is being generated. Demand has grown at a measly 6% CAGR and to top it off the govt. is distributing LED bulbs and solar pumps which will reduce demand further. Why are we generating all this power again?

  7. This is very speculative but there is some suspicion on the reported sales and profits of Ujaas. We need to see cash flow of this year and compare with past few years to confirm if there are issues. Need to wait for AR. This could be a big corporate governance issue if it turns true.

  8. Another corporate governance issue is that they are lending the money they got form share sale back to Ujaas through a trust. Isn’t this a related party transaction? Again corp. gov. issue.

  9. Its possible that sales for this year might be flat going by Q4 FY17 vs Q4 FY16. Market doesn’t give a high P/E for small players with fluctuating or flat earnings. See sales between FY13-FY15.

Disc: Invested, pragmatic.

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India is rolling out trains with solar-powered coaches that’ll save thousands of litres of diesel

Cash flow from Operations is negative. Trade Receivables increased by Rs 72.46 Crores.

Hi all,

Ujaas has received Letter of Allocation from SECI for an aggregate capacity of 20.03 MW for implementation of Grid Connected Rooftop Solar PV System Scheme for Government Building in different states/ union territory of India.

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This will lead some upside in the stock…

Ujaas’s June & Sep has been a lacklaustre. Lets hope that management is able to break into the big league with the 20GW tender from Govt of India opening up

we see another 11% fall in Ujaas, thanks to their results on 10th Nov
Mr. Market is punishing Ujaas for not being able to come back on track

Just cant understand one thing. They won so many orders in the last 2 quarters. Approx 60 MW in Q1 and Q2 and approx 20 MW in Q1 itself. Atleast if they had executed the 20 MW orders then keeping 5 crores income 1 MW implementation and approx 12% Profit Margin, their profit should have been atleast 10 - 12 crores. How come its just 4.5 crores.
Really dissapointed.
Please help guys and advice me what to do with this stock. I am already at around 40% loss in this stock.

I am a retired engineer, worked a total of 38 years in the field. So I record my view as under:

It may perhaps be understood that execution of an order in the energy sector takes sufficient time, including some Govt. formalities. For solar energy it is the minimum, still then a period of one and a half year is required for completion, commissioning and finally transmission to the user. So, order itself does not add to the turnover of the company within six to nine months. Further, most of its orders are from State Govt(s), not from the Govt. of India. Therefore, getting payment requires further time even after completion of all works. However, interim payments (advance or running bills) are received during execution, which may be a maximum of 75% of the order value. Therefore, with the recent orders, their turnover and profits are assured for next two years with uniform rise quarterly. Accordingly, the rise in net profit and margins may perhaps be calculated taking a rise of 20% of the all order values in each quarter.

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Thankyou Mr psarma1976 for your views. They seem correct. Just one more request… Could you provide me your views whether I should keep holding or book loss, switch to some other stock and then return back to Ujaas at a later date ? I have been holding since the last 9 months approx but am still at 36% loss now. Please help… If you advice to exit and come back later, when do you expect to return back. Please provide your views.

As per my technical study, the stock has a strong support at 22.60. Yesterday, in spite of bad results and market going so much down, the stock closed at its support. So, perhaps it will be wise to buy more at CMP and accumulate further on dips if goes to next support of 21.80, then 20. I have earlier sold all at 26.80 and yesterday bought some quantity at 22.85

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@psarma: In conference calls Ujaas Energy management has stated multiple times that it takes them just 2-3 months on an average for completing a project. They have always cited this as a reason for not having a large order book at any point of time. Even the recently won SECI order takes (only) up to 9 months for completion according to Vikalp Mundra.

We need to wait for the conference call for clarity.

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