Stock to buy: Waaree Energies, Premier Energies’ peer gets 52% upside target

A peer of Waaree Energies Ltd and Premier Energies Ltd has received a 'Buy' rating from Equirus Securities. The domestic brokerage said the established solar module manufacturer in India is entering a capex-heavy phase. The investment case, the domestic brokerage said, is largely valuation-driven, with any re-rating contingent on timely execution.

For now, it has suggested a March 2027 target of Rs 290 on the stock, hinting at 52 per cent potential upside. This is Vikram Solar Ltd.

"In an industry increasingly favouring scale and upstream integration, supported by policy tailwinds and rising domestic demand, the company plans to expand module capacity from 9.5GW to 15.5GW by Q1FY27. It also intends to add a 12GW cell manufacturing facility with the first cell out from Q3FY27 onwards," Equirus Securities said.  

Earnings growth supported by capacity ramp-up

As this expansion unfolds, margin recovery is expected from FY28, driven by higher realisation DCR modules. Equirus, however, said this is contingent on timely commissioning and ramp-up of cell capacities, with sensitivity to module realisations and input costs.

"We forecast 68 per cent/81 per cent/110 per cent revenue, Ebitda and PAT CAGR over FY25-FY28E, with FY28E RoE/core RoIC of 29 per cent/19 per cent. With the capex cycle peaking in FY27E, FCFF should turn positive from FY28E. We initiate coverage on Vikram Solar with LONG and a March 2027 target price of Rs 290 set at 8 times March 2028E EPS (50 per cent discount to peers) – reflecting execution risk, earnings sensitivity and lower integration vs peers," it said.

 Valuation discount reflects execution risks

Equirus Securities  said Vikram Solar is well-positioned to benefit from the structural expansion of India’s solar manufacturing ecosystem, supported by rising domestic solar installations, policy support for domestic manufacturing and increasing adoption of DCR-compliant modules. Its ongoing capacity expansion and backward integration into cell manufacturing should strengthen its positioning within the domestic solar value chain over the medium term, it said. 

"We expect Ebitda/Wp to increase from Rs 2.60 in FY25 to Rs 2.80 in FY26E, moderate to Rs 1.90 during the ramp-up phase in FY27E and recover to Rs 3.20 by FY28E, supported by higher utilisation and a mix shift toward DCR modules," it said.

That said, compared with peers Waaree Energies and Premier Energies, who have early movers with deeper backward integration, Vikram Solar carries higher execution risk, with cell manufacturing yet to stabilise and upstream integration still evolving, Equirus Securities said.

In relative valuation, Equirus compared Vikram Solar with Waaree Energies and Premier Energies, the closest listed peers in India’s solar manufacturing ecosystem. It believes Vikram Solar warrants a discount at this stage of its investment cycle for several reasons.