Azure Power Global: Promising Outlook Challenged By Controversies

Nov. 21, 2022 11:39 AM ETAzure Power Global Limited (AZRE)2 Comments
The Green Edge profile picture
The Green Edge
78 Followers

Summary

  • Azure Power Global Limited's recent stock price took a dive under the new macroeconomic regime, with rising inflation and interest rates, worsened by controversies involving whistleblower allegations, public interest litigations, and legal disputes.
  • Despite Azure Power Global having a large 4.5 GW pipeline, 2 GW worth of development is largely halted, which could potentially create a further shock for investors.
  • Besides, Azure Power has a relatively high proportion of debt with low EBITDA/interest expense, which is concerning under the challenging macroeconomic outlook.
  • Trading multiples show Azure as the most undervalued among its peers, with its TEV valued at 8x of total revenues, which seems reasonable given its recent negative exposure to controversies.
  • I will recommend a "hold" rating for Azure Power Global Limited in the short term (6 months), with its rating and valuation to be assessed following updates on leadership and controversies.

aerial view of Two workers installing solar panels on a rooftop

Eloi_Omella

Azure Power Global Limited (NYSE:AZRE) is a pure-play renewable energy developer and provider in India focusing on solar energy generation. It is among the fastest-growing renewables players in India, operating 45 utility scale projects with a combined rated capacity of

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This article was written by

The Green Edge profile picture
78 Followers
The Green Edge aims to identify sustainability-themed investment ideas with lucrative risk-reward, seeking to realise potential green alpha in strong value-growth equities mix. It is achieved through strong fundamental analysis combined with proprietary quantitative capabilities in sustainable investing.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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