Premier Energies: Order inflows up 227% YoY but operations weak; upside capped: Nomura

Premier Energies’ Q2 results were strong, but the profit beat was primarily driven by higher-than-expected other income. Between Premier Energies and Waaree Energies, Waaree’s growth appeared stronger, supported by a favourable sales mix and the ramp-up of its high-margin cell plant. Nomura India noted that while order inflows rose 227 per cent year-on-year, operational performance missed estimates, and the upside on the counter appears capped.

Premier Energies reported 71.61 per cent surge in consolidated net profit of Rs 353.44 crore on 20.27 per cent rise in sales at Rs 1,836.87 crore.

Nomura India maintained its 'Neutral' rating with a target price of Rs 1,100. It  cut its FY26 Ebitda estimates by 2 per cent to account for slower-than-expected ramp-up in H1FY26. That said, the foreign brokerage raised its FY27 and FY28 Ebitda estimates by 14 per cent and 9 per cent, respectively. It is factoring in a 5 per cent and 10 per cent increase in revenue estimates over the two financial years, along with 100 bps increase in margins.

The upward revision factors in acquisition of new businesses, robust
order book and a healthier margin outlook due to higher share of cells in order book. It rolled forward its  valuation to December 2027 suggesting a higher target of Rs 1,190 from Rs 1,100 earlier, based on 13 times December 2027 EV/Ebitda. At present, the stock is currently trading at 20 times FY26 Ebitda.

"PEL has rapidly expanded its product portfolio by venturing into allied product segments such as inverters, battery energy storage systems (BESS), and transformers. The management sees tremendous growth potential in each of these segments due to favorable industry dynamics. Furthermore, it expects the complementary product portfolio to result in strong sales synergies, lower cost of customer acquisition and better margins," Nomura said.

Nomura said PEL’s management also expects these segments to ramp up and eventually reach revenue contribution of 25 per cent.

Meanwhile, another brokerage Nuvama noted that Premier Energies stayed optimistic on domestic market growth prospects citing rising demand, favourable government policies and improving technologies. Demand push from policies such as PM Surya Ghar Muft Bijli (27GW), PM Kusum Scheme (30GW) and CPSU Scheme–Phase II (5GW) should aid growth over next two–three years, it said.