KPI Green incorporated in 2008 is part of KP Group; it is involved in solar and hybrid power generation. Company has end to end model in power generation where they develop, build, own, operates and maintains solar and hybrid power plants. KPI Green acts as an Independent power producer and also provides services to Captive Power Producers (CPP).

KPI’s Business

• KPI has three categories in their portfolio – 
• Independent Power Producer (IPP): In this category KPI sale power generated at their own plant through Power Purchase Agreement (PPA) to businesses. IPP business is conducted under brand name ‘Solarism’ and located at 17+ locations in Gujarat. For IPP category KPI has 42+MW order in hand.
• Captive Power Producer (CPP): In this category KPI sale solar power projects to its customers and also maintains and operates them. For this category KPI has 74+ MW of orders in hand. 
• Industrial Plot Sale: A small portion of revenue is generated by selling Industrial lands to third parties and is leased back by KPI for solar projects but in recent times company is focusing on owned land as it makes financing of projects easier. 

• KPI’s Revenue Mix - 

• KPI has a concentrated presence in Gujarat only. Their facilities are located at 23 different locations in Gujarat.

Positive Industry Outlook

• India holds the fourth position in the world for Renewable energy installed capacity and fourth position in Solar Power Capacity also India has an ambition of installing 500GW of non-fossil fuel capacity by 2030 and achieving net zero emission by 2070.
• As of Jan 2024 India has a solar energy installed capacity of 74.30 GW against the potential of 748 GWp and by 2030 Indian government has established a target of achieving solar energy capacity of 280 GW which then will be contributing more than 50% in overall renewable energy capacity.
• For achieving this ambition Indian government has allowed 100?I in this sector and has announced its intent to invite bids for 50GW of renewable energy capacity annually till 2028. 
• Apart from allowing FDI in sector government has taken many initiatives to promote renewable energy like introduction of PLI for solar PV modules, Solar parks schemes and PM-KUSUM scheme.

Peer Comparison

Strong Growth Plans

• KPI has established a target of achieving 1 GW capacity by 2025 with CPP vertical at 750 MW and IPP at 250 MW.
• Company is looking to upgrade its technology for better and efficient results.
• Company is expecting hybrid energy ‘wind solar’ to grow in future and will expand its presence aggressively in this area.
• Company will reduce its leased property portfolio and will move ahead with owned land as it makes financing of projects easier.

Key Performance Indicators for KPI

• Strong Growth in Order Book of Solar Energy

• Market Share of Solar capacity

• Unit Generation Growth under IPP

Financial Performance

Revenue – Almost three fold growths from previous year shows strong demand in the sector as well as companies capability to meet the expectations.

EBITDA – Improvement in EBITDA Y-o-Y basis reflects improvement in operational efficiency and margins.

D\E – Debt to equity ratio for company has slightly increased over years but given growth in order book and capacity expansion it seems fair and company still have headroom to meet future capital requirements.

ROE – Return on equity has shown growth over the years and able to meet the expectations of investors.

Shareholding Pattern – Over the period FII and DII have increased their stake in the company while promoters holding are stable in a range.

SWOT Analysis 

Strengths –

• Company has utilized its capital efficiently and has produced good returns.
• Cash position has improved for company over the years.
• Institutional investors have increased their holding in the company.

Weakness - 

• Promoters have high level of shares pledged.
• Company’s’ business is concentrated in one region.

Opportunity – 

• Increasing demand in the sector with awareness.
• Government initiatives and favorable policies.

Threats –

• Securing land for the construction of solar plants.
• High level of competition from traditional and other renewable energy producers. 
• Business of company is highly affected by seasonal fluctuations. 

Conclusion – 

• KPI Green is growing company in solar and hybrid energy sector and has shown good results over the years.
• Both solar and hybrid energy order book has shown good growth over the years.
• Company holds very little market share and face huge competition from some big and established players and will need to move strategically in this capital intensive business.
• Technological up gradation will play a major role in future growth for company. Currently KPI is strategically investing in technology but to pace up with market will be a long and tough road.

Notes - Some parts of data reflected in report is taken from following sources – 

• Annual Reports, company website
• Invest India.gov , Ministry of new and renewable energy
• BSE India