Anand Rathi’s renewable bets: Two stocks set for over 30% upside—Are these the next big power plays?
The domestic brokerage firm Anand Rathi Research initiated coverage on key renewable energy sector stocks. The brokerage house focused on the solar Panel Voltaic (PV) manufacturing value chain, calling this segment the ‘Wafers to Watts’ plays. Premier Energies and Waaree Energies are their top picks in this segment.
Government push supporting renewable power plays
They feel the Ministry of New and Renewable Energy’s (MNRE) goal to reach 500GW of renewable capacity by 2030 also offers a major push to the segment. The brokerage firm stated that solar energy’s Levelised Cost of Energy (LCoE) is now highly competitive (Rs 2.5–2.9/kWh) compared to coal (Rs 5.2–6.2/kWh). Strong governmental policies like the PLI scheme and mandates such as the Domestic Content Requirement (DCR) are favouring domestic and integrated manufacturers, as DCR modules command a substantial premium and deliver significantly higher EBITDA margins (around 34% against 15% for non-DCR modules).
Understand the DCR mechanism and what it means
Before moving ahead, DCR is a policy mechanism implemented by the Indian government, particularly by the Ministry of New and Renewable Energy (MNRE), designed to boost domestic manufacturing in the solar sector. DCR mandates the use of domestically sourced components in solar-panel manufacturing.
Anand Rathi’s big bets in renewable power
In the renewable energy space, Anand Rathi initiated coverage on two leading integrated solar PV manufacturers: Premier Energies and Waaree Energies.
Anand Rathi on Premier Energies: Pioneer in cell manufacturing
Anand Rathi initiated coverage on Premier Energies with a ‘Buy’ rating. It has a target price of Rs 1,321 on the stock, implying an upside of 29%. The company’s proven execution in cell manufacturing and industry-leading operating margins and return ratios are the key factors supporting the share price of Premier Energies. In fact, this is one of the first companies to establish a capex-intensive cell manufacturing line, giving it a key technological edge.
The company is one of the few that caters to third-party cell sales. It holds around 11% market share in domestic cells produced year-to-date. Furthermore, Premier Energies is expanding aggressively through a Rs 12,000 crore capex plan aimed at tripling cell capacity to 10GW, doubling module capacity to 11.1GW, and adding 10GW of ingot–wafer integration by FY28. Plus, the company has a 100% domestic order book of Rs 8,500 crore (5.5GW)
Anand Rathi on Waaree Energies: Market leadership and global reach
Anand Rathi initiated coverage on Waaree Energies with a ‘Buy’ call as well. They have a target price of Rs 4,654, implying a further potential of 35% for the Waaree Energies share price. In fact, Waaree Energies is India’s largest solar manufacturer, and the robust order pipeline is a key factor driving the positive recommendation.
The company boasts a record 25GW order book valued at Rs 49,000 crore, ensuring a strong execution pipeline. Talking about Waaree Energy’s expansion, it is executing a substantial Rs 15,000 crore expansion plan to scale module capacity to 25.7GW and triple cell capacity to 15.4GW by FY27, alongside integration into 10GW of wafer-ingots.
The company’s direct presence in the US markets gives it a critical competitive advantage, where it operates a 1.6GW module plant in Texas (with plans to expand), which helps insulate it from US policy shifts affecting exports and allows it to capitalise on US opportunities.
The company’s growth is expected to be sustained by leveraging backward integration and a rising mix of profitable DCR modules.