Does the recent rally in Adani Green, up nearly 30 times in one year, really justified and what are the key risks?
Answer
Answer
If there is one stock that has rallied from Rs.35 to Rs.1100 in one year, it is Adani Green Energy. Currently, the largest solar and green energy company in the world in terms of capacity, it does have some real practical problems in terms of customers.
Its record $6 billion solar project announced in June has no guaranteed customer as of date. This is likely to expose the company to a very high degree of financial risk. This is the first major SECI project without a state-guaranteed PPA.
SECI floated the tender for the project in June 2019 with an ostensibly assured PPA but later withdrew the clause of assured purchase of power. Effectively, there is no legal obligation on SECI regard the unsold quantum of power generated.