Overview of the renewable sector in India
As per the India Brand Equity Foundation (IBEF), India stands
fourth in renewable energy capacity and wind power globally. It ranks fifth in
solar power capacity. In October 2021, the country maintained its third
position on the EY Renewable Energy Country Attractive Index 2021.
Prime Minister Shri Narendra Modi mentioned
in June 2021 that India’s renewable energy capacity grew by 250% from 2014 to
2021. Besides, the share of renewable energy itself increased from 21% in 2012
to 37% in 2021. As of April 2022, the installed renewable energy capacity stood
at 158.12 GW, which is 39.43% of the overall installed power capacity.
Why has renewable energy been in focus?
Given the alarming rate of climate change and
escalating environmental concerns, countries across the globe are gradually
shifting from fossil fuels to renewable sources to meet their energy needs.
What are green energy stocks?
Green energy stocks are companies involved in
developing alternative technologies to replace fossil fuels with renewable
resources like wind, solar, and hydroelectric. Renewable energy also includes
supplementary technologies that will be instrumental in green energy
transformation.
Increasing environmental concerns, government
support, and massive investments in the renewable energy sector in India are
making it an attractive avenue for investors. Top conglomerates in the space
are running at it in full swing, expanding assets and capacities to help
achieve India’s 2030 target of reaching 500 GW installed capacity. In 2021-2022
alone, the industry saw a 125% y-o-y growth in investments. So it’s natural for
you to be interested in riding the wave and locking in attractive returns given
by the top renewable energy stocks in India.
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Types of renewable energy stocks in India
1. Clean energy stocks
Shares of any company related to renewable energy can be a clean energy stock. This includes alternative transportation technologies.
2. Solar and wind energy stocks
As the name suggests, these are more focused and associated with solar and wind energy.
3. Hydroelectricity stocks
These are companies that use flowing water to
generate energy. Currently, hydroelectricity is one of the most popular
resources used and is only expected to rise over time.
Why invest in renewable energy stocks in
India?
While the industry has been developing slowly, given the
rapid rate of climate change, faster development of the green energy sector is
the need of the hour. Following are a few reasons why the prospects for the
renewable energy sector look greener:
Green energy is the future and has a huge scope
The Central Electricity Authority has estimated that the
country’s power requirement is likely to reach 817 GW in 2030, driven mostly by
the transport and real estate sectors.
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Companies investing massively to aid renewable energy
transformation
While the government is doing its part, companies have also
been investing significant funds in the sector to accelerate progress and meet
India’s target of reaching net zero emissions by 2070.
Big names like Reliance Industries, Adani Group, Tata
Group, and JSW are making the most of this crisis cum opportunity. Together,
they are looking to invest over Rs. 4 lakh cr. in the next 5-10 yrs in the green
energy sector.
Reliance Industries aims to make India the most affordable
destination for green energy globally within the decade. To enjoy swift
success, it looks to mirror its telecom strategy in the green energy sector and
plans to invest Rs. 75,000 cr. by 2024. Adani Group, on the other hand, wants
to become the world’s largest renewable power generating company by 2030. To
achieve this, they are considering an investment of over ₹1.5 lakh cr. in the
sector over the next decade.
Tata Power is not far behind, having planned investment
of ₹75,000 cr. in the next 5 yrs. Finally, JSW Energy Ltd plans to invest
₹75,000 cr. by March 2030 and aims to become carbon neutral by 2050.
The list of best Renewable energy Stocks to invest are given
below :
Benefits of Investing in Energy Stocks
Energy is a key sector of the economy and
will continue to see a rise in demand in the coming future, especially as India
moves towards the goal of becoming a developed country. This increased demand
will be met through both conventional and renewable sources of energy.
Additionally, by investing in energy stocks,
investors can gain from capital growth and dividends. Many investors have
earned handsome profits by investing in
stocks like Reliance and Adani this year, which have returned
spectacular results.
Finally, investing in energy sector stocks
will help investors and traders to diversify their portfolios. They can also
gain diversification benefits by investing within the energy sector as these
stocks deal with various sub-sectors, such as power, solar energy, oil &
gas etc.
Factors
to Consider Before Investing in Energy Stocks
Investors need to bear in mind that while
energy sector stocks have the potential to offer huge returns, they are also
highly risky. This is because the energy markets are generally cyclical and
highly volatile. The wild swings in the oil market currently are an example.
Another essential thing to be considered is
the impact of government regulations. For instance, the levy of windfall taxes
and higher duties on ATF fuels suddenly squeezed the margins of refining
companies, thus reducing their profitability.
Furthermore, energy companies are now being
subjected to even more scrutiny over their carbon emissions. Global warming and
environmental pollution are serious concerns. While many energy companies have
been making efforts to reduce their carbon footprint and remodel their
business, it will require a substantial amount of CAPEX. Not all companies may
be able to afford it and thus may need to shut down.
Important things to remember:
1. Do Not Blindly Follow Hot Tips
No matter how credible the source is, never
follow a stock marketing tip blindly without conducting thorough research
personally. Always select the stocks after doing proper research and analysis
on the performance as well as the companies. While some tips can work out to
give you huge benefits, the wrong ones can push you down under the risk pretty
quickly.
2. Eliminate Loser Stocks from
Portfolio
There is absolutely no guarantee that a stock
will rise after a great fall. Know that it is extremely important to be
practical about what is possible and what's impossible in the stock market. So,
upon realizing that a stock is performing poorly in your portfolio, accept your
mistake and sell it immediately to prevent further losses.
3. Don't Exceed Your Investment Budget
Abruptly
While it's true that long-term investments
are way better than other forms of investment, you shouldn't exceed your
investment budget in a haste. Instead, decide on a fixed amount and invest it
across various good stocks. Rather than investing in only one stock, divide
your budget evenly across multiple good-performing stocks and shares.
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Good Info. Thanks fo sharing
ReplyDeleteThank you so much...
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