Why did Alpex Solar, Saatvik Green, and other solar stocks fall by up to 18% today?

On Friday, several renewable stocks like Waaree Renewables, Oriana Power, and many other notable and newly listed players like Emmvee Photovoltaic Power plunged heavily because of a rumour floating around in which MNRE, Ministry of New and Renewable Energy, likely said that they directed the NBFCs to halt lending to renewable players citing overcapacity issues, but the news was not official and missed a big piece of the announcement. In this article, we will delve more into the details of it.

About the News

The Ministry of New & Renewable Energy (MNRE) has clarified that it has not issued any advisory asking banks or NBFCs to stop lending to renewable energy projects or equipment manufacturers. The ministry said recent reports about a lending pause are incorrect and may have caused confusion among investors and industry players.

MNRE explained that it has only shared updated data on India’s solar PV manufacturing capacity with lenders. This was done so banks can take well-informed decisions and extend funding beyond just module manufacturers to the full solar value chain, including solar cells, wafers, ingots, polysilicon, solar glass, and aluminium frames. The ministry emphasised that lenders are encouraged to support these upstream segments as India expands its domestic manufacturing ecosystem.

The government also reaffirmed its strong commitment to renewable energy growth. India has already reached 259 GW of non-fossil fuel capacity and is targeting 500 GW by 2030. MNRE said financing for green energy projects will continue as usual, and the sector remains a key national priority.

So in conclusion, MNRE cited that banks and NBFCs should support the players who are engaged in the entire value chain and be cautious about the ones who are involved in the manufacturing of only solar modules.

So which companies are safe and which are vulnerable?

To understand this better, it is essential to know how the solar manufacturing value chain works. It starts with polysilicon, which is the ultra-pure raw material used to make solar products. This polysilicon is melted and shaped into ingots, which are then sliced into very thin wafers, like cutting a block into thin sheets. These wafers are processed further to create solar cells, which are the components that actually generate electricity from sunlight. Finally, many solar cells are assembled into solar modules (solar panels), which are the finished products installed on rooftops and solar plants.

So, solar module players are the ones who are vulnerable to this. Players like Waaree Renewables and Waaree Energies, KPI Green, Oriana Power, Tata Power, Premier Energies, etc, are the least vulnerable ones as they are engaged in the entire value chain like BESS, ingots, wafers, EPC, etc.

But on the other hand, companies like Saatvik Green Energy, Vikram Solar, Websol Energy, Emmvee Photovoltaic Power, Alpex Solar, etc, which derive a majority chunk of their business from Solar modules only, are the most vulnerable to this update shared by MNRE. 

The biggest hit was absorbed by Alpex Solar today (18 percent down), which was mainly because of its business. It is one of North India’s largest PV module manufacturers. It derives a staggering ~89 percent of its revenue from the manufacturing of solar PV modules, and the remaining is derived from EPC services of AC/DC solar pumps. Additionally, the company aims to take its total PV manufacturing business capacity to 3.6 GW by FY27 from 1.2 GW currently. This makes this company one of the most vulnerable to this policy shift.

Written by Satyajeet Mukherjee

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