Macroaxis Stories

Will Ellomay Capital (USA Stocks:ELLO) and Azure Power (USA Stocks:AZRE) deliver in August?

July 3, 2023  By Aina Ster
Macroaxis Story
As we move into August, both Ellomay Capital (ELLO) and Azure Power (AZRE) are set to deliver strong returns. Azure Power, with 64.16M shares outstanding and a book value per share of 488.48X, is in a robust financial position. Despite a substantial total debt of $107.17B, the company's cash flow from operations stands at $4.98B, indicating a healthy ability to service its debt. Azure Power's cost of revenue is $1.26B, which, coupled with a working capital of $2.3B and cash reserves of $11.1B, further underscores its financial strength. The company's short ratio of 4.14X suggests a relatively low level of short interest, indicating investor confidence. With a cash per share ratio of 177.71X, Azure Power offers an attractive proposition for investors seeking solid returns. For more details, visit their website at https://www.azurepower.com. As the month progresses, both companies are well-positioned to deliver strong performance. Many rational traders are currently steering clear of the independent power and renewable electricity producers sector. However, it's worth taking a closer look at Azure Power Global to understand how it compares to Ellomay Capital and other similar entities. We will discuss some of the competitive aspects of both Azure Power Global and Ellomay Capital.
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Upon examining the fundamental indicators between Azure Power and Ellomay, one can assess the impact of market volatility on both companies' prices and determine if the risk can be diversified by incorporating them into a single portfolio. Pair trading strategies can also be utilized, such as aligning a long position in Ellomay with a short position in Azure Power. For more information, please refer to our pair correlation module. Now, let's delve into the analysis of the assets. The asset utilization indicator reflects the revenue generated for every dollar of assets a company currently holds. Azure Power boasts an asset utilization ratio of 10.26 percent, suggesting that the company generates $0.10 for each dollar of assets. A rising asset utilization ratio implies that Azure Power Global is becoming increasingly efficient in utilizing each dollar of assets for its daily operations.
Investing in Azure Power Global (AZRE) could potentially yield strong returns, given the company's solid financial footing and promising market position. With a robust working capital of $2.3 billion, the company has the financial strength to weather economic downturns and invest in growth opportunities. The firm's shares outstanding stand at 64.16 million, indicating a significant level of investor interest and liquidity in the market. Despite a negative return on equity of -0.12, it's important to note that this figure can be influenced by factors such as debt and does not necessarily reflect the company's profitability or growth potential. Azure Power's workforce of 471 employees underpins its operations, providing the manpower necessary to drive its strategic initiatives forward. While the company currently has a payout ratio of 0, this is not uncommon for growth-oriented firms that prefer to reinvest earnings back into the business. Therefore, despite the lack of dividends, Azure Power's strong financial position and potential for growth make it a compelling investment option.
Investment perspective, in general, refers to a viewpoint or opinion regarding investment opportunity in Azure Power. It encompasses the assessment of an investment's potential risks and rewards, and expectations for its performance over time. Several factors influence the investment perspective on Azure Power, including investment goals, risk tolerance, time horizon, market conditions, and research and analysis. Investors have varying goals, such as capital preservation, income generation, or long-term growth. Risk tolerance plays a significant role in shaping an investor's perspective, with some being more risk-averse and others willing to take on higher risks for potential returns.

Watch out for price decline

Please consider monitoring Azure Power on a daily basis if you are holding a position in it. Azure Power is trading at a penny-stock level, and the possibility of delisting is much higher compared to other delisted stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Azure Power stock to be traded above the $1 level to remain listed. If Azure Power stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.

How important is Azure Power's Liquidity

Azure Power financial leverage refers to using borrowed capital as a funding source to finance Azure Power Global ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Azure Power financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Azure Power's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Azure Power's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Azure Power's total debt and its cash.

How is Azure allocating its cash?

To perform a cash flow analysis of Azure Power, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Azure Power is receiving and how much cash it distributes out in a given period. The Azure Power cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

A Deeper Perspective

As we enter August, investors are keeping a keen eye on Ellomay Capital (ELLO) and Azure Power (AZRE), two promising stocks in the energy sector. Azure Power, with a current valuation of $115.12 billion, has shown significant potential with a potential upside of 8.26. The company's strong financial position is evident in its cash and equivalents standing at $8.58 billion, and a robust working capital of $2.3 billion. Despite a negative earnings per share of -0.81X, Azure Power's cash per share is an impressive 177.71X, indicating a strong cash position relative to its share price. Furthermore, the company's risk profile, as measured by its variance of 27.54 and kurtosis of 1.45, suggests a moderate level of risk for investors. A significant 91.7% of Azure Power's shares are owned by institutions, reflecting the confidence of institutional investors.in the company's long-term prospects. However, it's worth noting that there are 787.11K shares shorted, indicating some investors are betting on the stock's decline. Despite the retained earnings deficit of $12.79 billion, Azure Power's solid cash position and potential upside make it an attractive investment. As we move into August, both Ellomay Capital and Azure Power present intriguing opportunities for investors seeking strong returns.

Analysis of Azure Power Global

In our ongoing analysis of Azure Power Global, we have identified a significant trend. The stock's standard deviation, a crucial measure of volatility, has dropped to 5.25 as of today. This reduction suggests a decrease in the stock's price volatility, potentially indicating a more stable investment environment for Azure Power Global. However, while this may make the stock more appealing to risk-averse investors, it's crucial to remember that lower volatility does not necessarily equate to higher returns. Investors should consider this development in conjunction with other financial indicators and market trends when evaluating Azure Power Global's potential for their portfolios. As of July 3rd, Azure Power displays a Standard Deviation of 5.25, a mean deviation of 3.83, and a Risk Adjusted Performance of 0.002. Azure Power Global's technical analysis provides a methodology to utilize historical prices and volume patterns to determine a pattern that approximates the direction of the company's future prices. In other words, this information can be used to determine if the company will indeed mirror its model of historical prices and volume momentum, or if the prices will eventually revert. We were able to interpolate data for thirteen technical drivers for Azure Power Global, which can be compared to its competitors. Please verify Azure Power Global's market risk adjusted performance, variance, as well as the relationship between the Variance and Value at Risk to decide if Azure Power Global is priced correctly, reflecting its regular price of 1.77 per share. Also, please double-check Azure Power Global's Jensen Alpha, which is currently at -0.18, to validate the company's sustainability at a future point.

The Bottom Line

Despite the market surge, Azure Power Global (AZRE) experienced a dip of over 2 percent. While some firms in the utilities—renewable industry are showing signs of recovery or are due for a correction, Azure's long-term growth potential may not be as robust. The current market volatility presents a neutral outlook for the company, suggesting it may be prudent to refrain from any investment activity in Azure at this time. With an analyst target price estimated value of 5.0, which is significantly higher than its real value of 2.54, the risk-reward trade-off does not present an appealing investment opportunity. Moreover, the possible downside price of 0.0177 further emphasizes the need for caution. It's recommended to use our equity advice module to run different scenarios to ensure your risk level and investment horizon align with your current investing preferences concerning Azure Power.

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Editorial Staff

Aina Ster is a Member of Macroaxis Editorial Board. Aina delivers weekly perspective on ongoing market and economic trends, analysis and tips from predictive analysis to forecasting across various financial instruments. View Profile
This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Aina Ster do not own shares of Azure Power Global. Please refer to our Terms of Use for any information regarding our disclosure principles.

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