Orient Green Power Limited is a leading independent renewable energy company in India. Founded in 2006 and headquartered in Chennai, it develops, owns and operates renewable energy power plants across India. Its portfolio includes biomass, biogas, wind energy and small hydroelectric projects. As of March 2022, the company had an operational capacity of 311 MW across its renewable energy assets.
Table of Contents
Orient Green Power Company Overview
Historical Evolution
Orient Green Power was founded in 2006 by T Shivaraman, who currently serves as the Managing Director. The company received early investments from Bessemer Venture Partners and Orient Green Power Pte. Ltd Singapore in 2007-2008. In 2009, Shriram EPC and other PE investors invested further capital into the company.
Over the years, Orient Green Power has grown its portfolio through acquisitions of biomass plants and wind energy assets across India. Key milestones include acquisition of Amrit Enviro in 2008, Shriram Powergen in 2009, and 50% stake in Bharath Windfarms in 2010. The company also expanded internationally with renewable energy projects in Srilanka, Croatia, Czech Republic and other locations.
In 2013, the company initiated restructuring of debt and operations to streamline the business. Recently in 2022, the promoters divested majority stake to the Janati Group.
Financial Indicators
Index Presence:
- The company is present in 4 indices: SMLCAP, S&P BSE SMALL CAP, ALLCAP, S&P BSE ALLCAP, UTILS, S&P BSE UTILITIES, S&P MIDSMLCAP, S&P BSE MIDSMALLCAP.
Stock Price Information:
- Current Share Price: ₹25.85
- 52 Week High/Low: ₹25.50 / ₹7.09
- Share Price: Rs 25.85 (as of Jan 31, 2024)
- P/E Ratio: 213.64 (high, indicating potential overvaluation)
- Return on Assets (ROA): 0.28% (bad, suggests inefficient asset utilization)
- Current Ratio: 2.03 (good, indicates short-term solvency)
- Return on Equity (ROE): 0.38% (low, suggests low profitability)
- Debt to Equity Ratio: 0.38 (low, indicates low debt burden)
- Inventory Turnover Ratio: 0 (poor, indicates inefficient inventory management)
- Sales Growth: -21.32% (poor, indicates declining revenue)
- Operating Margin: -38.54% (very poor, indicates substantial operating losses)
- Dividend Yield: 0% (no dividend payouts)
- Financial Highlights (as of Jan 31, 2024):
- Share Price: Rs 25.85
- P/E Ratio: 213.64 (high and overvalued)
- Return on Assets (ROA): 0.28% (bad)
- Current Ratio: 2.03
- Return on Equity (ROE): 0.38% (low)
- Debt to Equity Ratio: 0.38 (low)
- Revenue Growth: -21.32% (poor)
- Operating Margin: -38.54%
- Dividend Yield: 0%
Strengths:
- Efficient Cash Conversion Cycle of 39.49 days.
- Healthy liquidity position with current ratio of 2.03.
Weaknesses:
- Poor profit growth of -54.13% for the past 3 years.
- Poor revenue growth of -6.20% for the past 3 years.
- Poor ROE of -1.08% over the past 3 years.
- High promoter pledging (93.16%).
- Poor ROCE of -0.02% over the past 3 years.
- Company has contingent liabilities of Rs 1,486.92 Cr.
- Company has negative cash flow from operations of Rs -1.79.
- Low EBITDA margin of -548.44% over the past 5 years.
- High PE ratio of 213.64.
- High EV/EBITDA of 265.17.
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Orient Green power share price historical movement
Recent Developments
- In Sep 2022, the promoters divested majority stake to Janati Group at ₹8 per share. The Janati Group acquired 32.5% stake in Orient Green Power.
- The company is exploring business diversification into new areas like EV charging infrastructure. It has also partnered with third-parties for solar power projects.
- Orient Green Power divested its stake in its European renewable energy ventures to streamline operations and cut losses.
Role in the Renewable Energy Sector
Core Business Model
Orient Green Power develops and operates renewable energy assets, majority being wind and biomass power plants. It has long term Power Purchase Agreements with state electricity boards, industrial consumers and private customers.
The company identifies sites with high renewable energy potential, acquires land, designs projects, procures equipment from vendors and manages end-to-end execution up to commissioning and operations. Orient Green Power has in-house O&M teams to operate and maintain the power plants.
Technological Advancements
Orient Green Power deploys advanced technologies in its wind and biomass power assets:
- The company has wind turbine generators from leading suppliers like GE, Gamesa, Suzlon, etc. with high capacity utilization factors.
- It uses technologically improved boilers, turbogenerators and cooling towers for high efficiency in biomass power plants.
- The company has installed enterprise monitoring systems to enable remote monitoring and control of renewable energy assets.
Orient Green Power Share Price Analysis
Current Share Price Dynamics
Orient Green Power is currently trading at:
- Share Price (NSE): ₹25.55 (as of February , 2024)
- Market Cap: ₹2,537 crores
- PE Ratio: 213.6
- 52 Week High/Low: ₹25.85 / ₹7.09
Technical Analysis
Indicators: Momentum indicators like RSI, MFI are in the neutral zone. MACD line is above signal line, indicating bullishness. The stock is trading above short and long term moving averages.
Volumes: Delivery volumes are high at 59% suggesting strong investor interest. The 3 month average delivery volumes stand at 63%.
Support/Resistance: Immediate support for Orient Green Power share is at 24.6. Resistance levels are at ₹25.3 and ₹25.9.
Outlook: With technical indicators in bullish zone the uptrend may continue. Volumes and delivery percentages signal positive sentiment.
Shareholding Pattern
| Shareholder Type | Percentage |
|---|---|
| Promoters | 29.42% |
| Domestic institutional investors | 2.73% |
| Public & Other | 62.89% |
| Foreign Institutional Investors | 2.96% |
| Corporate Holding | 2.01% |
Financial Performance
Analysis of Recent Financials
- Revenue: Declined by 21.32% year-over-year, indicating a shrinking top line.
- Profit: Turned positive with a profit of Rs. 3.14 crores compared to a loss of Rs. 21.73 crores in the previous year. However, this profitability is still fragile.
- EPS: Improved to Rs. 0.03 from a negative Rs. 0.24 in the previous year.
- Debt: Remained relatively low with a debt-to-equity ratio of 0.38, indicating a healthy financial structure.
- Cash Flow: Negative operating cash flow of Rs. 1.79 crores raises concerns about the company’s ability to generate cash internally.
- Ratios:
- PE Ratio: High at 213.64, suggesting the stock might be overvalued.
- ROA: Low at 0.28%, indicating inefficient asset utilization.
- ROE: Low at 0.38%, indicating weak profitability compared to shareholder equity.
- Current Ratio: Healthy at 2.03, suggesting sufficient short-term liquidity.
Strengths:
- Improved profitability compared to the previous year.
- Healthy current ratio and low debt-to-equity ratio.
- Efficient cash conversion cycle of 39.49 days.
Weaknesses:
- Declining revenue and poor profit growth over the past 3 years.
- High PE ratio and low ROA and ROE, indicating potential overvaluation and weak profitability.
- Negative operating cash flow.
- High promoter pledging of 93.16%
Quarterly Results (All Figures in Cr.):
| Particulars | SEP 2022 | DEC 2022 | MAR 2023 | JUN 2023 | SEP 2023 |
|---|---|---|---|---|---|
| Net Sales | 6.16 | 5.27 | 5.25 | 5.30 | 5.35 |
| Operating Profit | -2.65 | 0.04 | -0.65 | -1.71 | -2.67 |
| Profit After Tax | -6.42 | 14.14 | 2.82 | -2.18 | -2.91 |
| Adjusted EPS (Rs) | -0.08 | 0.17 | 0.03 | -0.03 | -0.03 |
Assessment of Financial Health
While Orient Green Power’s profitability has recovered, operating performance remains under pressure. Revenues need to grow at a robust pace for sustained profitability. The company has relatively high debt levels, although debt equity ratio has improved with the recent capital infusion. Liquidity position provides financial flexibility. Overall the financial health can be considered average.
Orient Green Power Share Price Targets
| Year | Target Price (INR) | CAGR (%) |
|---|---|---|
| 2024 | 35-40 | 35-50% |
| 2025 | 45-50 | 25-30% |
| 2026 | 55-65 | 20-25% |
| 2027 | 70-80 | 15-20% |
| 2028 | 85-100 | 10-15% |
| 2029 | 100-120 | 10-15% |
| 2030 | 125-150 | 8-10% |
Orient Green Power Share Price Targets 2024
The base case target price for Orient Green Power in 2024 is Rs 35-40. This factors in:
- Revenue growth of 15-20% driven by capacity expansion to 350 MW
- Improvement in profit margins to 8-10% through cost optimization
- PE re-rating to 18-20x on financial turnaround
- Capex of Rs 300-400 crores funded through internal accruals and debt
Upside risks: Higher tariff realizations, project commissioning ahead of schedule
Downside risks: Execution delays, adverse renewable energy policies
Orient Green Power Share Price Targets 2025
The expected share price range for Orient Green Power in 2025 is Rs 45-50. Key drivers:
- Revenue growth of 20% with operational capacity reaching 400 MW
- Economies of scale leading to EBITDA margins of 12-14%
- Debt reduction and interest cost savings
- Valuations at 15-17x PE multiple on stable earnings outlook
Upside risks: Entry into new high growth segments like solar energy
Downside risks: Regulatory changes regarding biomass power purchase
Orient Green Power Share Price Targets 2026
Orient Green Power’s share price in 2026 is estimated at Rs 55-65, based on:
- Steady capacity addition to 500 MW by 2026
- Gradual margin expansion to 14-16% on operating leverage
- Valuation multiple of 12-14x PE on stable earnings
- Equity dilution limited with lower dependence on external capital
Upside risks: Faster than expected ramp up in operational capacity
Downside risk: Adverse renewable energy regulations
Orient Green Power Share Price Targets 2027
In 2027, Orient Green Power’s share price targets stand at Rs 70-80, driven by:
- Revenue CAGR of 15-18% over next 3 years
- Higher efficiency leading to EBITDA margins of 16-18%
- Valuations at 10-12x PE owing to steady state growth phase
- Prudent leverage ratios below 1.0x debt to equity ratio
Upside risks: Entry into solar energy and hybrid projects
Downside risks: Cost overruns and project delays
Orient Green Power Share Price Targets 2028
Orient Green Power is expected to be valued at Rs 85-100 per share in 2028, based on:
- Consolidated capacity reaching 700 MW
- Strong cash flows supported by long term PPAs
- Valuations at 8-10x PE multiple on stable outlook
- Limited equity dilution and leverage ratios around 1x
Upside risk: Expansion in new geographies
Downside risk: Adverse policy shifts and tariff controls
Orient Green Power Share Price Targets 2029
In 2029, Orient Green Power’s share price is seen reaching Rs 100-120 based on:
- Gradual expansion to 800 MW installed capacity
- Profitability improvement with EBITDA margins above 18%
- Re-rating potential to 8-9x PE multiple
- Stable balance sheet with leverage below 1x
Upside risk: Technology advancements resulting in higher PLFs
Downside risk: Cyclical downturn in renewable energy investments
Orient Green Power Share Price Targets 2030
By 2030, Orient Green Power’s share price is estimated to trade in the range of Rs 125-150 driven by:
- Consolidated portfolio capacity crossing 1 GW
- Potential diversification into solar and hybrid projects
- Economies of scale driving profitability with ~20% EBITDA margin
- Valuations at 6-8x PE multiple on stable earnings
Upside risk: Higher than expected growth in clean energy investments
Downside risk: Emergence of new competing renewable energy players
Comparative Analysis
| Company | Price | MCAP (Cr.) | P/B | P/E | EPS | ROE | ROCE | P/S | EV/EBITDA |
|---|---|---|---|---|---|---|---|---|---|
| Nava | 473.95 | 6,877.05 | 1.94 | 35.05 | 13.52 | 9.39 | 11.34 | 4.30 | 22.21 |
| Inox Wind Energy | 5,460 | 6,577.98 | 5.09 | 24.26 | 225.10 | 0.63 | 0.73 | 528.09 | 24.11 |
| Orient Green Power | 25.85 | 2,535.17 | 2.64 | 213.64 | 0.12 | 0.38 | 0.64 | 108.20 | 278.00 |
SWOT Analysis of Orient Green Power
Strengths:
- Established player in the Indian renewable energy market: Orient Green Power is a pioneer in the Indian wind energy sector with over two decades of experience. This gives them a brand name, established relationships, and operational expertise.
- Diversified portfolio: The company has a presence across various renewable energy segments, including wind, solar, and hydro, reducing dependence on any single source.
- Focus on cost optimization: Orient Green Power has implemented initiatives to improve operational efficiency and reduce costs, making them more competitive.
- Strategic partnerships: The company has collaborated with leading players in the renewable energy sector, opening up access to new technologies and markets.
Weaknesses:
- Financial performance: The company has struggled with profitability in recent years due to factors like project delays, rising costs, and debt burden.
- Limited geographical presence: Their operations are primarily concentrated in India, making them vulnerable to fluctuations in the domestic market.
- Exposure to policy changes: The company’s growth is highly dependent on favorable government policies towards renewable energy. Any changes in policy could pose significant challenges.
- High debt levels: The company has a high debt-to-equity ratio, which increases financial risk and limits their ability to invest in new projects.
Opportunities:
- Growing renewable energy market: The demand for renewable energy in India is expected to grow significantly in the coming years, driven by government targets and falling costs. This presents a major growth opportunity for Orient Green Power.
- Technological advancements: Advancements in wind and solar technologies can lead to improved efficiency and cost reduction, benefitting the company.
- Government support: The Indian government has introduced various incentives and initiatives to promote renewable energy, which could create a favorable environment for Orient Green Power.
- Expansion into new markets: Exploring international markets or diversifying into other renewable energy segments like biomass or geothermal could open up new revenue streams.
Threats:
- Competition: The Indian renewable energy market is becoming increasingly competitive, with new players entering the market and established players expanding their offerings.
- Grid integration challenges: Integrating large-scale renewable energy into the grid can be challenging, leading to curtailment of power generation and impacting revenue.
- Fluctuations in commodity prices: Dependence on raw materials like steel and copper makes the company vulnerable to price fluctuations, impacting project costs.
- Policy uncertainty: Any changes in government policies, such as changes in tariffs or subsidies, can negatively impact the profitability of renewable energy projects.
Future Outlook
Growth Drivers
- Favorable renewable energy policies and push for clean energy can drive Orient Green Power’s growth.
- Turnaround potential with possible expansion into new business areas
- Takeover by Janati Group expected to bring operational improvements
Potential Risks
- Execution challenges in scaling up wind and biomass capacity
- Delays in payments from state electricity boards
- Highly leveraged balance sheet limits financial flexibility
- Intense competition from larger players in renewable energy
Investment Risk Analysis
Key Risk Factors
- Industry Risk: Policy changes regarding renewable energy tariffs and incentives
- Financial Risk: High debt levels currently at 0.4 debt/equity ratio
- Liquidity Risk: Negative cash flows can constrain liquidity
- Execution Risk: Delays in capacity expansion and diversification plans
Risk Mitigation Strategies
Strengthening Business Operations
- Focus on enhancing plant efficiency and availability to improve revenues
- Renegotiate PPAs and tariffs to ensure stable cash flows
- Cut costs across procurement, logistics and overheads
- Develop in-house O&M capabilities to optimize costs
Prudent Financial Management
- Adopt asset light model for new capacity expansion
- Refinance high cost debt to reduce interest costs
- Improve working capital cycle to shore up liquidity
- Plan capex prudently in line with cash flow generation
Conclusion
- Orient Green Power is a leading renewable energy company undergoing business transition
- Share price has seen strong momentum recently led by positive sentiment
- Growth outlook remains attractive despite near term challenges
- Financial health is average but potential turnaround exists
- Company needs to scale up capacities and diversify for next phase of growth
Orient Green Power’s share price will remain volatile in the near term and react to market sentiment, financial results and progress on expansion plans. Investors should monitor technical indicators, quarterly performance and management commentary to take timely investment decisions.
References and Citations
Financial Reports:
- Orient Green Power Limited Annual Report 2022-23: https://orientgreenpower.com/files/16th-Annual-Report-2022-23.pdf
- Orient Green Power Limited Standalone Financials Q2 2023-24: https://www.moneycontrol.com/financials/orientgreenpowercompany/results/quarterly-results/OGP
- Orient Green Power Limited Investor Presentation – December 2023:
Analyst Reports:
- Equitymaster – Orient Green Power 2022-23 Annual Report Analysis: https://www.equitymaster.com/stock-research/compare/GMRR-OGPC/GMR-POWER–URBAN-ORIENT-GREEN-POWER
- Motilal Oswal – Orient Green Power Limited Q2 FY24 Earnings Update:
Disclaimer: This analysis of Orient Green Power share price targets is for informational purposes only, not investment advice. I’m not a SEBI-authorized expert. Data and analysis are based on public info and AI tools, but may not be fully accurate or timely. Market conditions and company performance can change, leading to actual results differing from projections. Always do your own research and consult a qualified financial advisor before making any investment decisions