NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Geojit Report
Geojit initiates coverage on Waaree Energies Ltd. and Premier Energies Ltd. with a “Buy” recommendation. The brokerage has set a target price of Rs.3,650 /share for Waaree Energies implying a potential upside of Rs 18% and a target of Rs.1,066 /share for Premier Energies with potential upside 20%.
Waaree Energies
Investment Rationale
- Global and Indian solar module capacities are expanding rapidly, creating structural module oversupply that will push realisations lower and pressure industry-wide profitability.
- With oversupply rising, competition intensifying and realisations tapering, the industry is entering a margin compressive cycle, limiting value accretion for pure module manufacturers.
- Integrated manufacturers can partially offset realisation declines through better cost control, but current exceptionally high profitability is unsustainable and expected to normalise.
- Manufacturers are being forced into backward integration and horizontal diversification as competition intensifies across wafers, cells, storage and EPC.
- A simultaneous industry-wide race to build integrated capacity increases execution risk, with laggards likely losing competitiveness as peers scale faster. This leads to aggressive capex which can pressure free cash flow for firms in the near term. However, stabilization is expected as utilization ramps up.
Valuations
The brokerage sees a potential for a partial re-rating if Waaree is able to execute its capacity ramp-up in adjacent businesses and profitability trends sustains due to backward integration. Assigning 10x EV/FY28E Ebitda to the core business and valuing BESS business by DCF, green hydrogen and renewable infrastructure business using 1X P/Bk multiple , the brokerage's SOTP yields a target price of Rs 3,650 and initiates coverage with a Buy recommendation.
Premier Energies
Investment Rationale
- Global and Indian solar module capacities are expanding rapidly, creating structural module oversupply that will push realisations lower and pressure industry-wide profitability.
- With oversupply rising, competition intensifying and realisations tapering, the industry is entering a margin compressive cycle, limiting value accretion for manufacturers.
- Integrated manufacturers can partially offset realisation declines through better cost control, but current exceptionally high profitability is unsustainable and expected to normalise.
- Manufacturers are being forced into backward integration and horizontal diversification as competition intensifies across wafers, cells, storage and EPC.
- A simultaneous industry-wide race to build integrated capacity increases execution risk, with laggards likely losing competitiveness as peers scale faster. This leads to aggressive capex which can pressure free cash flow for firms in the near term.
However, stabilization is expected as utilization ramps up.
Valuations
The brokerage value Premier Energies using an SOTP framework, valuing the core solar manufacturing business at 12.0X FY28E EV/Ebitda and new businesses at price/book, arriving at a target price of Rs 1,066 per share, implying 20% upside, while factoring in margin normalisation, peak capex, higher depreciation and interest costs.
Geojit initates coverage with a Buy recommendation on the stock.
Together, Waaree Energies and Premier Energies exemplify the strategic pivot underway in India's solar manufacturing sector— from pure capacity expansion toward integration, diversification, and solution-led growth in an increasingly oversupplied and grid-centric renewable energy market..
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
