The Green Revolution: Best Indian Renewable Stocks9-min read

Renewable Energy Stocks: High Returns for a Better Tomorrow

The drive for the most profitable green energy stocks in India is on the rise as a new era of eco-friendly energy gains traction among investors. In 2022, the renewable energy sector in India experienced an unprecedented year-on-year growth rate of 9.83%, marking a significant 24-fold increase over the past 9 years. As a result, retail investors are actively seeking out the best green energy stocks in India to capitalize on this promising market trend.

Investing in renewable energy stocks in India offers a dual benefit. Firstly, it fosters the growth of alternative energy products, which translates into a better economy for all. Secondly, India’s increasing preference for clean and sustainable energy sources is opening up new investment opportunities for individuals, enabling them to increase their wealth.

However, it’s important to note that “best green energy stocks in India” is more than just a catchphrase. Investors need to conduct thorough research to identify the most suitable investment options. This guide aims to assist readers in locating valuable stocks in this sector, outlining the best methods for discovering the top green energy stocks in India, the leading brokerage firms in the market, the current top-performing stocks, the investment process, the risks involved, and strategies to mitigate those risks.

In This Guide:

1. Why Invest in Indian Renewable Energy Stocks
2. How to Choose the Best Indian Renewable Energy Stocks
3. Top Indian Renewable Energy Stocks for Retail Investors
4. How to Invest in Indian Renewable Energy Stocks Online: Full Tutorial
5. Risks and Challenges of Investing in Indian Renewable Energy Stocks
6. India’s Carbon Emissions Pledge
7. Conclusion

Why Invest in Indian Renewable Energy Stocks

The increasing population and a renewed focus on technology and sustainability have resulted in a remarkable surge in the value of green energy stocks in India. The renewable energy sector in India has experienced exponential growth, with a 396% increase in capacity over the past 8.5 years. In 2022, India witnessed an unprecedented growth rate of 9.83% in renewable energy additions, which highlights the effectiveness of energy stocks in India. This has led to a surge in interest among retail investors, who are actively seeking out investment opportunities in this sector. As more options become available, the value of these stocks is likely to continue its upward trend.

Currently, the most popular sources of energy in India are:

Solar

Over the past decade, India has made great strides in adopting solar energy. According to statistics, the country’s solar energy capacity has increased from 6.76 GigaWatts to an impressive 54 GigaWatts in 2022. The Ministry of New and Renewable Energy has reported that India now ranks 4th in the world for solar photovoltaic deployment, with an installed capacity of 61.97 Gigawatts as of Q4 2022.

Wind

India’s renewed focus on renewable energy is not limited to just solar power – the country is also looking to tap into the potential of wind power. As of 2018-19, India’s power generation capacity was 62.03 TWh, with wind power contributing to 10% of that total.

According to the Ministry of New and Renewable Energy, India has the potential to significantly increase its wind generation capacity by utilizing the 7,600 km of coastline along the country’s borders. With this untapped potential, India could become a major player in the wind energy sector, further reducing the country’s reliance on non-renewable sources of energy.

Hydro

According to the Ministry of Power, hydropower currently accounts for 11.4% of India’s total energy generation. With the country’s increasing focus on renewable energy, there is a growing expectation for the number of hydropower stations to increase in the coming years.

This trend towards hydropower is driven by the many benefits that it offers. Hydropower is a clean and renewable energy source that produces no harmful emissions, making it an environmentally friendly option. Additionally, hydropower stations can be built in a range of sizes, from large-scale installations to smaller, decentralized facilities, making it a versatile option for meeting India’s energy needs.

Biomass

Biomass is a vital part of India’s renewable energy sector, with 70% of the country’s population depending on it. The Ministry of New and Renewable Energy has recognized its importance and is implementing new biomass power and co-generation programs to promote its growth further. Recent studies show that there is a surplus availability of 28 GW worth of biomass energy in India, indicating significant potential for the development of more biomass plants in the future. With the Ministry’s ongoing efforts and the surplus availability of biomass, it’s no surprise that biomass is set to play a critical role in India’s sustainable energy future.

How to Choose the Best Indian Renewable Energy Stocks

The emergence of renewable energy stocks has created a new type of bullish movement in the market. However, such renewable energy stocks are not made equal. Some are too volatile, others are too low-growth for beginners, and only a few might be the right fit for your specific investing strategy.

The following are the main criteria on which a potential investor needs to focus on before making a purchase in a particular stock:

Company’s financial performance

The first factor to consider is the financial performance of a company. You can do this by analysing the company’s financial statements, which you can find on the Ministry of Corporate Affair’s online portal. The indicators that are best fit to help you decide whether a company’s stocks are worthy or not are price-to-earnings ratio and earnings-per-share.

With the price-to-earnings ratio, you can decide whether a company’s stock is overvalued or undervalued. Overvalue signals a major correction, or value drop, in the price charts. Under evaluation is a great long-term investment as it can hint at a parabolic increase.

Earnings-per-share will help you determine the profitability of a company, which would determine the profit you can generate through your share.

Industry trends

It is important to know that the industry trends change over time. One type of green energy stock performs better one season, and at other times, you will find the performance facing a downturn. Therefore, always keep up with the trends by staying updated with the financial news.

Market Conditions

Rising inflation prompts the arrival of a bear season, increasing the supply of certain energy stocks and diminishing their price. Therefore, pay close attention to the market conditions when you are looking for the best green energy solutions in India.

Top Indian Renewable Energy Stocks for Retail Investors

Here is the list of the best renewable energy stocks in India based on their past financial performance and potential upsides.

Tata Power Solar

Part of the Tata Group, Tata Power Solar is the best solar power energy stock in the country. With the capacity of generating 3.9 Gigawatt of clean energy, it aims to cover 80% of the total energy sector in India.

The stock has witnessed a bullish performance since its linear increase in 2020. While the current price is at an accumulation stage, the brand power of Tata makes it a safe bet for all types of investors.

Suzlon Energy

As one of India’s leading renewable energy companies, Suzlon Energy is mostly focused on manufacturing wind turbine generators. The company’s revenue in 2022 was 843 million USD. While the share price performance has been quite low for this stock, the current value presents a buying opportunity since this project has major upsides in the long term.

Renew Power

The third best stock is an independent power producer of renewable energy. The commissioned capacity of this stock stands at 7.7 Gigawatt. While the recent changes have created major retraces in its price chart, it is s a suitable investment that is looking to buy the dip.

How to Invest in Indian Renewable Energy Stocks Online: Full Tutorial

The renewable energy sector in India is experiencing rapid growth, making it an attractive investment opportunity. AvaTrade provides an accessible platform to invest in this booming industry. Follow these steps to start trading Indian renewable energy stocks:

Step 1: Open an Account on AvaTrade

Visit the AvaTrade website and click on “Register” or “Sign Up”. Complete the registration form with your:

• Name
• Email Address
• Phone Number

A verification email will be sent. Follow the instructions to verify your account. You will also need to complete the KYC process by submitting a government-issued ID (Aadhaar or PAN card) and proof of address.

Step 2: Access the Trading Dashboard

Once your account is verified, log in and navigate to the Trading Dashboard. This is your main control panel for managing trades, funds, and tools.

For beginners, AvaTrade offers a demo account to practice trading with virtual funds before committing real capital.

Step 3: Navigate to the “Market Watch” Section

On the left side of the dashboard, locate the “Symbols” icon (represented by a folder with a dollar symbol). This will open a list of available assets.

• Use the search bar to find renewable energy stocks or ETFs.
• Select the green energy stock you wish to trade.

Step 4: Review the Price Chart

After selecting a stock, a detailed candle chart will be displayed. This chart provides valuable insights, such as:

• Historical Price Movements: Understand past performance.
• Technical Indicators: Analyse market trends and patterns.
• Support and Resistance Levels: Identify optimal entry and exit points.

Step 5: Choose Your Buying Method

Click on the Buy or Sell icons located at the top left of the chart panel. These buttons provide two options:

• Quick Trade Panel: Execute trades swiftly.
• Detailed Order Panel: Review more detailed information before committing.

Choose the method that best suits your trading strategy.

Step 6: Set the Order Type and Execute the Trade

In the trading window, customise your order:

• Volume: Decide how many shares or units to trade.
• Order Type:
  • Market Order: Buy or sell immediately at the current market price.
  • Limit Order: Set a specific price to buy or sell.
  • Stop Orders: Automatically execute trades once the price reaches a predetermined level.

Once you’ve configured your order, click “Market Execution” to finalise the trade.

Step 7: Monitor and Manage Your Portfolio

After executing your trade, track its performance in the Portfolio Section. AvaTrade provides real-time updates and detailed analytics to help you adjust your strategy as needed.

Risks and Challenges of Investing in Indian Renewable Energy Stocks

Investing in even the best solar energy stocks in India isn’t without its challenges. Here is a list of some of them that you must be privy to before proceeding.

Regulatory changes

The surge in demand for green energy stocks in India has also attracted several unscrupulous players into the market. Some of these players resort to using inferior quality materials and misleading marketing strategies to artificially inflate stock prices. To curb such malpractices, the government has implemented several regulatory changes. However, as the market for clean energy continues to evolve, one can expect the government to take further measures to regulate the industry. If such measures are perceived as regressive, it could lead to a significant decline in the stock prices.

Geopolitical risks

The rising demand for raw materials like lithium, cobalt, and rare earth metals used in the production of renewable energy products like batteries, solar panels, and wind turbines has raised concerns over their supply chain and geopolitical implications.

For instance, most of the world’s lithium reserves are located in the “Lithium Triangle” of Bolivia, Argentina, and Chile, and China produces nearly 80% of the world’s rare earth metals. This concentration of resources in a few countries can lead to geopolitical tensions and trade disputes.

Moreover, conflicts and wars can disrupt the supply chain of these materials, as seen in the Russia-Ukraine conflict that led to the disruption of natural gas supplies to Europe. Any such disruptions can impact the production of renewable energy products and ultimately affect the stock prices of companies in the sector.

Market Volatility

Market fluctuations are a common occurrence in the world of investing, especially when the inflation rate is high. These fluctuations can lead to significant losses in stock prices and negatively impact investors’ portfolios. One way to mitigate this risk is to diversify the portfolio by investing in different sectors or asset classes. By doing so, investors can offset the loss of one stock with the gains of another, potentially reducing overall portfolio risk.

In addition to diversification, setting realistic investment goals is crucial to successful investing. Profits are rarely consistent and can be highly volatile, especially in volatile markets. It is essential to invest with a long-term perspective and keep in mind that returns are unlikely to be parabolic. Instead, investors should focus on building a solid portfolio and stick to their investment plan, avoiding knee-jerk reactions to market fluctuations.

India’s Carbon Emissions Pledge

India, with the support of China, is reportedly seeking to build a consensus within the G20 group that allows countries to choose their roadmap to reduce carbon emissions, instead of setting a deadline to end the use of fossil fuels. India is looking to introduce the phrase ‘multiple energy pathways’ in a communique to be released at a group summit in September. The move has garnered support from China and South Africa. Such pathways for energy transition would enable countries to use a variety of resources while working towards plans on net-zero emissions. At a recent meeting of the G20 Energy Transitions Working Group, India opposed a deadline proposed by rich nations, with China also lending support. Officials are meeting in the run-up to the G20 summit to finalise the group’s position on global issues, including climate change.

Conclusion

We have researched and evaluated the available value stocks in the market and analyzed the best platforms that offer attractive rates for investing in green energy stocks in India. Here are some key takeaways to keep in mind:

·      Before investing in any green energy stock, it is crucial to assess the company’s financial performance, brand power, industry trends, and market conditions. This information can help you make an informed decision and mitigate risks associated with investing in the stock market.

·       While there are multiple risks associated with trading stocks, it is possible to mitigate them by doing your due diligence before investing. This includes understanding market conditions, diversifying your portfolio, and keeping realistic investment goals.

Despite the current market volatility and the risks associated with investing in the stock market, green energy stocks have several long-term upsides. They are the future of investments that can provide a sustainable and prosperous tomorrow. Although some stock prices may be declining due to inflation, they have the potential to rise as market perceptions shift. So, if you want to be a part of a greener and wealthier tomorrow, now is the time to invest in green energy stocks.