Azure Power Global currently holds roughly 8.58
B in cash with 4.98
B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 177.71, which can makes it an attractive takeover target, given it will continue generating positive cash flow.
Investing in Azure Power, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Azure Power along with other instruments in the same portfolio. Using conventional
technical analysis and
fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed
many market ups and downs, anticipate that the market will even out over time. This tendency of Azure Power's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Azure Power. Your research has to be compared to or analyzed against Azure Power's peers to derive any actionable benefits. When done correctly, Azure Power's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Azure Power Global.
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.
Azure Power Correlation with Peers
Investors in Azure can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Azure Power Global. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Azure Power and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Azure is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with
your current brokerage. Please check
volatility of Azure for more details
A Deeper Perspective
Azure Power Global secures Sharpe Ratio (or Efficiency) of -0.0165, which signifies that the company had -0.0165% of return per unit of risk over the last 3 months. Our standpoint towards foreseeing the risk of any stock is to look at both systematic and unsystematic factors of the business, including all available market data and
technical indicators. Azure Power Global exposes twenty-one different
technical indicators, which can help you to evaluate volatility embedded in its stock price that cannot be
diversified away. Please confirm Azure Power Global
risk adjusted performance of
(0.030178), and Mean Deviation of 4.95 to double-check the risk estimate we provide.
Azure Power latest price dip can leaving shareholders with little time to react
The jensen alpha is down to -0.35 as of today.
As of the 2nd of June, Azure Power shows the
mean deviation of 4.95, and Risk Adjusted Performance of
(0.030178). Azure Power Global
technical analysis gives you the methodology to make use of
historical prices and volume patterns to determine a pattern that approximates the direction of the firm's future prices. Put another way, you can use this information to find out if the firm will indeed mirror its model of
historical prices and volume momentum, or the prices will eventually revert. We were able to interpolate data for nineteen
technical drivers for Azure Power Global, which can be compared to its rivals. Please confirm
Azure Power Global variance,
maximum drawdown, as well as the
relationship between the Maximum Drawdown and
semi variance to decide if Azure Power Global is priced correctly, providing market reflects its regular price of 2.28 per share. Please also double-check Azure Power Global
total risk alpha, which is currently at
(0.44) to validate the company can sustain itself at a future point.
The Bottom Line
Although some firms in the utilities—renewable industry are either recovering or due for a correction, Azure may not be as strong as the others in terms of longer-term growth potentials. With an impartial outlook on the current market volatility, it may be better to hold off any inventment activity and neither buy nor trade any shares of Azure Power at this time. The Azure Power Global risk-reward trade off is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Azure Power.
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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
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