Vikram Solar shares tumble 10% after Q1 results; here's why | Target prices

Shares of Vikram Solar Ltd took a beating, falling 10 per cent in Friday's trade after the solar company said its profit after tax (PAT) tumbled 85 per cent year-on-year (YoY) to Rs 20 crore in the June quarter compared with Rs 133 crore in the same quarter last year. This is even as revenue from operations grew 38 per cent YoY to Rs 1,563 crore from Rs 1,134 crore YoY. The company said its Ebitda margin contracted to a mere 8 per cent compared with 21 per cent in the year-ago quarter, and 16 per cent in the March quarter.

Following the results, UBS maintained 'Neutral on the stock with an unchanged target of Rs 215. JM Finacnial suggested 'Add' and a target of Rs 219 on the stock.

"We were expecting a sharp moderation in performance of pure-play module players like Vikram Solar. But the actual performance is more than a large miss on JMF and consensus. Earlier, Waaree Energoes also reported disappointing results. As non-DCR prices continue to decline and demand-supply gap persists in cells, an improvement in performance is unlikely. Commissioning of the cell-production facility and subsequent stabilisation for optimal cell efficiency will determine Vikram’s performance trajectory. This remains our key monitorable," JM Financial said.

JM Financial, for now, has an 'ADD' rating on the stock, subject to review post the conference call.

Vikram Solar shares fell 10.2 per cent to hit a low of Rs 156.25 on BSE.  The scrip has fallen 49.6 per cent in the past 12 months. The Bloomberg consensus target on the stock, based on seven analyst targets, at Rs 260 implied 55 per cent potential upside. The company is scheduled to host analyst call today. Revised target by a few brokerages may follow.

Vikram Solar said its employee cost was up 56 per cent YoY to Rs 55 crore from Rs 35 crore, other expenses soared 46 per cent to Rs 114 crore from Rs 78 crore. Depreciation was up 34 per cent YoY, while financial cost also jumped 53 per cent to Rs 49 crore.

The enhancement of the Vikram Solar's proposed backward-integrated wafer and ingot manufacturing facility at its Gangaikondan site, Tamil Nadu from 6 GW to 9 GW is scheduled to be commissioned by FY29.