Waaree Energies, Premier Energies: Why YES Securities see up to 60% upside in solar stocks

Domestic brokerage firm YES Securities remains positive on solar cell manufacturers including Waaree Energies Ltd and Premier Energies Ltd. In its recent report dated March 10, 2025, the brokerage has maintained a 'buy' rating on both the stocks, suggesting up to 60 per cent upside in them.

According to YES Securities, Indian solar cell manufacturers are navigating a period of transformation, marked by ongoing supply constraints and margin pressures. The sector has traditionally depended on imported cells, but recent policy interventions, such as ALMM and PLI incentives, have spurred investment in local manufacturing capabilities. This shift remains critical as the industry moves towards adopting higher-efficiency N-type platforms like TOPCon and HJT, replacing older Mono PERC technologies.

YES Securities observes that new capacity additions are increasingly driven by the adoption of advanced solar technologies, supported by developer preferences and policy-driven efficiency requirements. However, despite a bullish long-term view on domestic manufacturing and backward integration strategies, YES Securities has lowered its valuation multiples for Waaree Energies and Premier Energies in response to elevated near-term risks and margin pressures.

The domestic demand outlook for solar modules is robust, YES Securities highlights, anchored by utility-scale projects and increasing adoption in the commercial and industrial (C&I) and rooftop segments. Favourable power economics and corporate decarbonisation goals are supporting this momentum, while government initiatives such as PM Surya Ghar and KUSUM, coupled with expanding Green Open Access, continue to bolster demand across market segments.

Shares of Premier Energies dropped over 2.7 per cent to Rs 768 on Thursday, against its previous close at Rs 789. Its total market capitalizations slipped below Rs 35,500 crore. Similarly, Waaree Energies' stock dropped more than 2.5 per cent to Rs 2,615.15 during the day, with its total market capitalization barely holding Rs 76,000 crore mark. The stock had settled at Rs 2,682.70 on Wednesday.

Rooftop solar installations have experienced significant growth, more than doubling to 7.1GW in 2025, according to YES Securities. The firm attributes this expansion to improved subsidy execution and ongoing policy schemes, which together are expected to drive sustained medium-term demand growth and increase the share of domestically produced modules and cells in projects.

YES Securities points out that recent increases in solar module prices are driven by higher input costs—particularly polysilicon, silver, aluminium, and copper—and a strong demand backdrop. Manufacturers have been able to pass on these costs, aiding pricing discipline. Silver prices remain a key cost concern for cell manufacturers, who are responding with technology upgrades, hedging, and efficiency improvements.

In response to evolving global trade policies, especially in the US, Indian manufacturers are diversifying sourcing to the Middle East and Africa. YES Securities notes this move is strengthening supply-chain resilience and maintaining export competitiveness, particularly as manufacturers continue to absorb new module and cell capacities and benefit from healthy order backlogs.

YES Securities further reports that operational performance in Q3FY26 remained stable for major listed solar companies, with improved capacity utilisation as new facilities approach steady-state operations. Stronger ramp-ups in the cell segment and advances in backward integration strategies towards integrated solar value chains have emerged as defining trends for the sector.

The overall industry outlook, as seen by YES Securities, reflects improving operational traction underpinned by strong order pipelines, utilisation gains, and integration initiatives. These factors are expected to support operating leverage over the medium term, despite the near-term challenges highlighted in their recent coverage of leading manufacturers.

YES Securities has a 'buy' rating on both Waaree Energies and Premier Energies with a target price of Rs 4,191 and Rs 1,182, respectively, suggesting an up to 60 per cent upside in both the stocks from their Wednesday's lows.