Avendus Spark has initiated coverage on Premier League Ltd. with an 'add' rating and a one-year target price of Rs 1,100. The brokerage firm has cited multiple tailwinds for the company, including a favourable policy environment and significant capacity expansion plans.
The brokerage noted that Premier Energies is in a position to become the third-largest integrated solar module manufacturer in India, supported by a 39% compound annual growth rate (CAGR) in capacity over FY25-28.
Incorporated in April 1995, Premier Energies is a relatively new renewable stock, having gotten listed in Sept. 2024. Despite listing at a 120% premium to its issue price, the scrip is trading marginally ahead of its listing price.
Avendus Spark, though, believes the road ahead could be interesting for the solar company, with production growth expected at 44% CAGR, with strong gross margins of 36%.
Avendus also estimates a 31% CAGR in profit after tax over FY25-28, with a return on capital employed (RoCE) of 32%.
The brokerage firm believes Premier Energies will benefit from India's position as the second-largest solar market globally. The country is even projected to take the top spot by FY31.
The annual domestic market for solar modules is pegged at around 50 gigawatts.
Avendus highlighted a continued demand-supply mismatch in solar cells. While current capacity stands at 100 gigawatt, growing at a 54% CAGR through FY21-25, it is well short of annual demand, which is projected to reach 266 gigawatt.
Therefore, with the right amount of capacity expansion, Premier Energies can be a key driver of India's growth in the solar cells space.
Keeping all these factors in mind, Avendus believes Premier Energies is fairly priced and has a sizable growth roadmap ahead, as it looks to leverage India's potential in the solar space.
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