Premier Energies: Why ICICI Securities suggested Buy on this stock

India’s solar manufacturing sector is poised for significant transformation, with a draft proposal aiming to increase domestic content requirements. In a fresh note, ICICI Securities highlighted that India has proposed (draft proposal) another important measure to increase the domestic content for solar manufacturing. The new policy intends to bring wafer production within Indian shores.

According to the draft, new projects connected to grid will have to compulsorily procure domestically manufactured wafer and ingots from June 2028. This step follows earlier proposals of domestic procurement from April 2024, and domestic procurement of cell from June 2026. These guidelines are designed to further strengthen local supply chains.

ICICI Securities said the new proposed guidelines are looking to go one step ahead and ensure that module manufacturers who are not procuring wafers from the approved list will be delisted. The brokerage expects solar manufacturers who will be able to integrate the entire value chain are likely to benefit from the proposed measures.

ICICI Securities reiterated its positive stance on Premier Energies. The brokerage expects integrated players to gain from the evolving regulatory framework, which favours companies with domestic capabilities across the supply chain.

India has implemented multiple initiatives to support domestic solar manufacturing. "India has taken a number of measures to ensure domestic supply chain of solar manufacturing." Notably, "It had earlier announced domestic procurement of solar modules (or approved list of module manufacturers) which was implemented from April 2024." Additionally, "Also, it had distributed incentives (PLI) for domestic solar manufacturing of Rs 20,000 crore."

Further reinforcing localisation, "It has recently mandated the domestic procurement of solar cells (or approved list of cells) which will be implemented from June 2026." "The first approved list has already been published." As outlined, "Note that ~13GW has made it to the approved list. Premier has 2GW and Adani Enterprises has ~4GW under the list."

According to the notification, "With the notification of new guidelines, it is evident that the objective to push for backward integration has been clearer than ever." "The new proposed domestic procurement is expected to be made effective from Jun’28." However, "the list will be issued after 1) 15GW of capacity and 2) at least three manufacturers (to ensure competition exists)." After publication, "all RE project bids will procure modules which use domestic wafers."

India’s solar sector currently boasts "India has >100GW of domestic module capacity and has ~25GW of domestic cell capacity." ICICI Securities commented, "ICICI Securities believe that a number of players are likely to have wafer capacity up and running by Jun’28." "Large players are well placed to comply with the new guidelines as mandatory clauses are likely to eliminate small players from competition." "ICICI Securities reiterate our BUY rating on Premier Energies (trading at 27x FY27E earnings)."