Waaree Energies, Premier Energies: Should you buy them after a strong Q4 show

Waaree Energies Ltd has announced a twofold increase in its Q4 EBITDA, benefiting from robust demand and operational efficiencies. The EBITDA margin surged by 879 basis points year-on-year. Nuvama Institutional Equities reiterates a 'buy' rating for Waaree with a target price of Rs 3,622, while Premier Energies remains unrated.

Waaree's management is optimistic about the future, guiding for a strong FY26 EBITDA of Rs 55–60 billion, marking a twofold increase from FY25. This growth is underpinned by a firm order book extending beyond March 2026 and the commissioning of its cell facility.

The company achieved a 90% utilisation rate at its 1.4GW cell plant, with a 53% year-on-year increase in module production. Waaree's order book for the next two years stands at 25GW (Rs 470 billion). The demand for new energy solutions and advanced technology is expected to further drive growth.

Premier Energies Ltd is also making strides with plans to expand its module capacity to 11GW and cell capacity to 10GW by FY28. The company has entered joint ventures with Taiwan-based SAS and Nuevosol Energy to enhance its production capabilities.

Premier's revenue increased by 44% year-on-year to Rs16 billion, with EBITDA soaring threefold to Rs 5.3 billion. The company's focus on operational efficiencies and an improved product mix has enabled a substantial rise in EBITDA margins.

Waaree is executing a strategy to become a horizontally and vertically integrated new energy player, aiming for a long-term margin of approximately 20%. This move is expected to de-risk its earnings concentration and capitalise on growth opportunities.

The solar sector in India is poised for growth, driven by rising demand, favourable government policies, and technological advancements. Waaree plans to concentrate on the domestic market post-implementation of the Approved List of Models and Manufacturers (ALMM) for cells from June 2026 onwards.

Waaree's projected capital expenditure stands at Rs 125 billion, with ongoing construction of 6.4GW of cells and 6GW of module capacity. The company anticipates its cell facility to be fully operational by the end of June 2025, supported by increased demand from AI and energy storage.

Waaree Energies reported blockbuster numbers in Q4FY25. Its strong execution with expansion of scale and better utilization were the key drivers of growth during the quarter, said Aditya Birla Money. The company boasts a pipeline of Rs 47,000 crore consisting of 25GW of modules & 3.2GW of EPC orderbook. It has Rs 15,500 crore of free funds available on its balance sheet to fuel future growth and diversifications, it added without rating the stock.

However, Jefferies had downgraded Waaree Energies to 'hold' but revised its target price to Rs 2,100. Another brokerage firm, Kotak Institutional Equities increased its target price to Rs 2,600 but maintained its 'sell' rating on the stock. Kotak has a 'sell' tag on Premier Energies too, with a target price of Rs 900. ICICI Securities has a 'buy' rating on Premier Energies with a target price of Rs 1,320.