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Sunday, 16 July 2017

Ujaas Energy- Not just a solar story

 







During the IT boom, Peter Lynch - the great investor,  had said don't invest in a company
manufacturing IT products as the same would be replicated by cheaper companies in China & Taiwan but invest in companies using these technologies & delivering services,  and we all knows the story of Infosys, TCS, Wipro & so on..

Off late, there is lot of noise in the Solar sector. There is a bad rush to invest in the Solar sector as no one wants to miss the bus.


If you read more closely, you will find a similarity in the behavior of the  Solar and the IT sector. Every year or rather even every month now, we hear about solar energy getting cheaper, tenders open at record low prices.

With the price of solar modules getting cheaper every day, the manufacturers in India are feeling the heat since imports are cheaper than indigenous production.  Companies like Moser Baer, Indo Solar, which are manufacturing solar panels are in losses.

In all this, where do we see Ujaas Energy ?
It is a Solar company but not a manufacturer.
Just as TCS in the IT industry, it is only a service provider - an EPC contractor.

It uses its expertise in executing various Government & non Government contracts erecting Solar plants for its clients & providing after sales maintenance.  It works on an asset light model where the Company does not have to invest heavily on capital expenditures for  setting up a manufacturing or a Solar plant. Ujaas is a service driven model,  providing its expertise know-how and services to its clients in setting up solar plants for them. Due to this structure/model they are unaffected by the ever depreciating solar panel prices in international markets & cut throat competition by Chinese companies. 



The world is investing heavily in solar and we have companies like Tesla which are indulging in research and development of new  inventions in the solar world.
The time is not too far when our cars would run on electric batteries and our home would light up by Solar energy. 


It a right time to invest long in a Solar company and in India Ujaas might be the answer.
Ujaas Energy- Profile.


Last year company has installed  around 75-80 megawatt and this year company is targeting  to install approx 150 mw of solar power.They have an order book position of 40 mw and a bid book position of around 75 mw as of now.On business front, currently they are not planning to raise money as promoters have recently reduced their shareholding from 70.69% to 62.91 % for expansion purpose  they have  invested a good amount of money in developing marketing infrastructure, building brand positioning strategy which led to low EBITDA margin in Q4 17. But this is like an investment which is going to pay off in times to come.

The company is focusing large on the rooftop on both government commercial and industrial (GCI) and home segments,
co.believes  there is a lot of growth in rooftop segment because there is no established player in that segment except Ujaas.

Company has 20 cr outstanding shares with market cap of 560 cr. having PE of around 15 while industry PE is of around 19.share price is trading at 2.5 times to book value.

After considering all the above mentioned facts ujjas energy is another bet for multi-bagger returns for long term view.It will be no surprise that share will trade in the range of 80 within next 2-3 years

4 comments:

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