Azure Power Global Limited

AZRE Details

Q3FY21 Result Highlights: Azure Power Global Limited (NYSE: AZRE) is a leading independent solar power producer in India, mainly involved in the selling of solar energy to central and state government utilities and independent industrial and commercial customers at predictable fixed prices. During December 2020 quarter, the company produced electricity of 783.7 million kWh, up 14.4% on pcp, mainly due to the additional 183 MWs of AC (277 MWs DC) operating capacity commissioned since December 31, 2019. During the quarter, the company earned total operating revenues of INR 3,521 million (US$ 48.2 million), up 15.6% on pcp. Net loss for the quarter stood at INR 1,088 million (US$ 14.9 million).

Q3FY21 Results (Source: Company Reports)

Update on 4 GW Tender: In a recent update, the company informed that it is working towards signing PPAs (Power Purchase Agreements) for the 4 GW manufacturing linked tender for which a Letter of Award (LOA) has already been received. Moving ahead, the company is continuing its policy to only take on contracts that create shareholder value and earn returns that are above our cost of capital.

Outlook: As at 31 December 2020, the company had short-term restricted cash of INR 4,594 million (US$ 62.9 million), which is expected to be utilised primarily for capital expenditures over the next twelve months. For the fourth quarter ended 31 March 2021, the company expects its revenues to be between INR 4,335– INR 4,435 million. In the next financial year, i.e., FY21, the company expects revenue to be in the range of between INR 17,900 – 18,900 million.

Key Risks: The company is exposed to the risks associated with the changes in the commercial and retail prices of traditional utility generated electricity. The company is also exposed to the risks associated with changes in tariffs at which long term PPAs are entered into. AZRE has a high debt to equity multiple of 3.62x for Q3FY21, compared to the industry median of 2.75x, exposing the company to the risks associated with the long-term debt.

Stock Recommendation: Over the last one month, the stock has corrected by 25.89%. The stock is trading slightly higher than the average 52-weeks’ price level band of $53.06 - $12.56. On the technical analysis front, the stock has a support level of $30.95 and resistance of $41.75. Considering the company’s decent operational performance in Q3FY21, its ongoing work towards the signing of PPAs (Power Purchase Agreements) for the 4 GW manufacturing linked tender, modest outlook, and associated key risks, we believe that the stock has the potential to provide further upside in the coming times. Hence, we suggest a “Speculative Buy” recommendation on the stock for investors with high-risk profile at the closing price of $33.25, up by 1.37% as on 19 February 2021.

AZRE Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Taoping Inc.

TAOP Details

Entered into a Consulting Agreement with Great Bay: Taoping Inc. (NASDAQ: TAOP) provides integrated end-to-end digital advertising solutions enabling customers to distribute and manage ads on cloud-based ad display screens. The company recently entered into a consulting agreement with Great Bay Capital Investment Limited, under which Great Bay will provide business development services focused on blockchain and digital assets (such as Bitcoin, Ethereum, etc.) investment opportunities. In consideration for Great bay services, TAOP intends to issue a warrant within 7 days after the execution of the Consulting Agreement for the purchase of 1,000,000 ordinary shares of the Company, exercisable at $3.50 per share at any time prior to the 181st calendar day after the date of issuance. 

H1FY20 Result Highlights: For the six months ended 30^th June 2020, the company reported revenue of $3.7 million, down by $3.4 million on pcp, mainly due to the impact of the COVID-19 pandemic and an unfavorable macro environment in China for the first half year of 2020. Loss from operations stood at $7.5 million, up from the loss of $2.2 million in pcp, mainly due to an increase of $5.8 million in allowance for credit losses. Net cash used in operating activities stood at $1.2 million. Over the half-year period, the company advanced its technology and platform to provide cost-effective digital advertising solutions to customers. 

H1FY20 Result Highlights (Source: Company Reports)

Outlook:  With its recently announced strategic partnership with Ivy International Education Technology Co., Ltd, the company is well placed to develop and market new learning programs for quality education. In January 2021, the company entered into a securities purchase agreement with certain investors to raise around $2 million. These proceeds will be used by the company to accelerate growth. In the long run, the company is well-positioned to continue to expand and enhance its existing network and to create value well into the future.

Key Risks: Being based in China, the company is exposed to the risks related to the macroeconomic environment in the country. Further, the company is exposed to the risks associated with the fluctuations of the Cryptocurrencies.

Stock Recommendation: Over the last one- and three-months period, the stock has provided a return of 105.24% and 147.01%, respectively. The stock is trading lower than the average 52-weeks price level band of $15.00 and $1.86, offering a decent opportunity for accumulation. On the technical analysis front, the stock has a support level of $4.28 and resistance of $9.56. Considering the company’s consulting agreement with Great Bay Capital Investment Limited, its recently announced strategic partnership with Ivy International Education Technology Co., Ltd, its continued focus on expanding and enhancing its existing network, current trading level and associated key risks, we are of the view that the stock has the potential to provide further upside in the coming times. Hence, we give a “Speculative Buy” recommendation on the stock at the closing price of $7.04, up by 22.02% as on 19 February 2021, owing to the update regarding the consulting agreement with Great Bay Capital Investment Limited. We also suggest investors to consider the associated risks as well while taking such investment decisions.

TOAP Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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