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Amid the boom in green energy and PM Surya Ghar free electricity scheme in the country, the days of renewable energy companies listed in the stock market are gone. In this series, Pune based solar infrastructure company GK Energy Has got a big government jackpot. The company has received a huge project from the power distribution unit of the state government to install rooftop solar panels on the roofs of 1 lakh houses across the state. The total value of this mega order is estimated to be approximately Rs 454.5 crore. As soon as this news reached the market through exchange filing, there was a rush among investors to buy shares of the company and the stock jumped by almost 9% in intraday trading.
1-1 kW solar system will be installed on 1 lakh houses: 100 MW project
According to the regulatory filing given by the company to the exchange, this project will be executed completely on turnkey basis. Under the scheme, the company will have to install rooftop solar system of 1 kilowatt (1 kW) capacity per house. In this way, the total production capacity of this entire project including 1 lakh houses will be 100 MW. The company will be paid Rs 45,450 (including GST) per kilowatt by the government.
Under this project, the responsibility of the company will not be to just install the solar panels and leave it. GK Energy will handle the end-to-end engineering of the system, designing, supply of solar equipment, safe installation, testing and commissioning after connecting to the power grid. Along with this, the company will also have to handle the operation and maintenance (O&M) of all these 1 lakh rooftop solar systems for the next 5 years. The company has been mandated to complete the installation of each house within just 60 days of issue of the respective work order.
This single order will cover 90% of the company’s quarterly revenue.
According to market experts, this order of Rs 454.5 crore is very important in view of the current financial size of the company. This single order is equivalent to almost 90% of the total revenue of Rs 505 crore reported by GK Energy in the June quarter (Q1). This indicates that the company will continue to have strong revenue visibility in the coming quarters and will see a sharp jump in earnings from the EPC segment.
The company primarily operates in two major verticals—solar engineering, procurement and construction (EPC) services and domestic and international trading of solar cells and related components. At present, the largest part of the company’s total income comes from EPC business.
Huge jump of 54% in financial performance and margin mathematics
The company had presented strong financial results in the recently concluded June quarter (Q1 FY27). On an annual basis, the company’s consolidated net profit increased by 54% to Rs 57 crore, which was just Rs 37 crore in the same quarter of the last financial year. The company’s total revenue from operations also registered a strong jump of 55.4% to Rs 505 crore as against Rs 325 crore a year ago.
The company’s Ebitda (EBITDA) improved by 44% to Rs 82.4 crore, while profit before tax (PBT) increased from Rs 50.5 crore to Rs 80.3 crore. However, amid these stellar numbers, rising operating costs have resulted in the company’s EBITDA margin declining slightly to 16.3% from 17.6% last year, which the company management is focusing on improving through cost control in the upcoming projects.
9% rise in stock market: Will the rise continue tomorrow also?
After the announcement of this big government project, strong buying was seen in the company’s shares in Wednesday’s trading session. The stock climbed up to 9% to close at Rs 134.81, the day’s high. A multi-fold increase in volumes was recorded, which clearly shows that along with retail investors, high-net-worth and DII investors have also increased confidence in the company’s execution ability.
On the technical charts the stock has given a strong breakout crossing its key moving averages. In the last six months, this stock has given positive returns of about 18.62% to investors. Market experts believe that midcap solar companies like this are directly benefiting from the government’s clean energy targets and rooftop subsidy policies. Investors and traders will keep a close eye on this stock in the next trading session also.