Four undervalued solar-energy stocks in India
With governments worldwide coming out with supportive policies and technological advancements driving down costs, clean energy sources like solar and wind are no longer just a part of environmental debate but also a significant economic opportunity.
Therefore, solar power was supposed to be on a one-way ride up, but the market has its own way of keeping investors honest.
With US President Donald Trump’s tariff moves and the uncertainty it has stirred around global supply chains, solar stocks have taken a beating recently.
Prices have slipped, sentiment has cooled…and that’s exactly when opportunities appear.
What this really means is investors have a window to hunt for strong solar companies in India that the market is undervaluing.
These four are worth a closer look:
Waaree Energies Ltd
It is a leading manufacturer of solar PV modules in India with an aggregate installed capacity of 15GW. Its cell manufacturing capacity stands at 5.4GW as of 2024-25.
Beyond manufacturing, it provides engineering, procurement, and construction (EPC) solutions and operations and maintenance (O&M) services.
It is also expanding its business into other energy transition areas.
The company has made investments in green hydrogen and electrolyser businesses and is also exploring the inverter market.
At the current price of ₹3,125, the stock trades at a price-to-earnings ratio (PE) of 40, which is lower than the industry average of 58.
The price-to-book ratio (PB) of the stock is 8.8, below the industry average of 10.9.
Coming to its financial performance, the company has a five-year average return on equity (RoE) of 30% and a five-year sales compound annual growth rate (CAGR) of 49%.
Similarly, its net profit has grown at a CAGR of 192% over the past three years and at a CAGR of 114% over the past five years.
Looking ahead, the company has guided for a robust earnings before interest, taxes, depreciation, and amortization (Ebitda) in the range of ₹5,500 crore to ₹6,000 crore.
Its strong and growing order book, integrated value chain, and proven execution engine give comfort in this guidance being achieved. As of July 2025, its order book stood at 25GW, valued at ₹49,000 crore.
The integration of cell manufacturing is also expected to enhance profitability, potentially doubling margins on a fully integrated basis, though on a blended basis, it anticipates a 2-3% improvement.
It’s also pursuing significant expansion of its manufacturing capabilities and diversification into new energy transition areas.
Plans include an additional 4.8GW module manufacturing capacity by 2026-27 and a 6GW integrated wafer, cell, and module factory projected to be operational by 2027.
Premier Energies Ltd
It is an integrated solar cell and solar module manufacturer with 29 years of experience in the industry.
Its product portfolio includes solar cells, solar modules, monofacial and bifacial modules, as well as EPC and O&M solutions.
The company also intends to integrate backwards into wafer production with a 2GW per annum facility.
Coming to the company’s valuations, at the current price of ₹997, the stock trades at a PE of 43, which is lower than the industry PE of 58.
If we look at the price-to-sales ratio (PS), it is trading at around 6.8, whereas its median has been 7.6 since listing.
Looking ahead, the company is on track to achieve a 10GW integrated manufacturing capacity across ingot, wafer, cell, and module production by 2027-28. This also includes its strategic entry into the battery energy storage (BESS) and inverter businesses.
As of July 2025, Premier Energies has a growing order book of ₹8,600 crore.
The demand for domestic content requirement (DCR) modules remains very strong, driven by government schemes like Surya Ghar, Kusum, and CPSU.
Websol Energy System Ltd
Established in 1994, it is one of the leading manufacturers of high-efficiency solar cells and solar modules in India.
It operates an advanced, fully automated facility for solar cell and module production on approximately seven acres of land in Falta Special Economic Zone, West Bengal.
The company serves both domestic and export markets with a diversified product portfolio of solar cells and modules and maintains strong relationships with key industry players.
As of 1QFY26, the company had a current cell capacity of 600MW and a current module capacity of 550MW.
The company is strategically positioned to support India’s rapidly expanding solar industry and its target of 280GW of solar capacity by 2030, driven by strong market demand and supportive government policies.
Coming to valuations, at the current price of ₹1,261, the stock trades at a PE of 28, which is lower than the industry average of 58.
Regarding its financial performance, the company boasts a three-year average RoE of 23% and a three-year sales CAGR of 39%.
Similarly, its net profit has grown at a CAGR of 160% over the past three years.
Looking ahead, the management has indicated that the company is on track to successfully commission an additional 600MW Mono PERC Cell Line (Phase II) in less than one year, with the commercial start targeted for October 2025.
The entire capital expenditure for this new cell line is being funded through internal accruals.
Prostarm Info Systems Ltd
Fourth on the list is Prostarm Info Systems, primarily engaged in the designing, manufacturing, assembling, sale, service, and supply of energy storage equipment and power conditioning equipment.
The company offers a diverse range of manufactured products, including UPS systems, inverter systems, lift inverter systems, solar hybrid inverter systems, lithium-ion battery packs, servo-controlled voltage stabilizers, and isolation transformers.
It provides both customised and standard products from its in-house facilities and through third-party contract manufacturers.
Beyond its core manufactured products, Prostarm also supplies third-party power solution products such as batteries, solar panels, and allied products.
The company has successfully executed and commissioned rooftop solar PV power plants totalling 10.56MW at over 100 sites.
Coming to its valuations, the company is available at a PE of 38, lower than other pure-play solar energy stocks.
Regarding its financial performance, the company has a three-year average RoE of 33% and a three-year sales CAGR of 26%.
Similarly, its net profit has grown at a CAGR of 38% over the past three years.
Looking ahead, the management has outlined a strategic expansion into Battery Energy Storage System (BESS) manufacturing.
Prostarm is setting up a 1.2GWh annual capacity BESS facility in Reliance MET, Jhajjar, Haryana. Commissioning is expected by the end of FY26. This initiative positions the company as one of India’s few OEMs in BESS manufacturing.
The company has already secured significant orders in this segment, including an ₹52 crore order from Adani Electricity for a 22 MWh BESS project and a letter of award from Bihar State Power for a 120 MWh BOOT project with a 12-year monthly rental model.
This strengthens its order book and supports long-term recurring revenue growth.
The management intends to capitalise on market tailwinds, noting that India’s BESS market is expected to grow from less than 0.2GW to 66GW by 2032.
Conclusion
There is no doubt that India’s solar energy sector is on a strong growth trajectory, supported by favourable policies, rising demand, and the global shift towards cleaner technologies.
However, the recent sell-off driven by tariff noise and global uncertainty has pulled valuations down, but the fundamentals of these companies haven’t cracked.
In fact, most are expanding capacity, strengthening order books, and positioning themselves for the next decade of growth.
If you can separate short-term volatility from long-term potential, undervalued solar stocks might just turn into the brightest part of your portfolio.
As always, do your own due diligence, conduct thorough research on financials and corporate governance before making investment decisions, ensuring they align with your financial goals and risk tolerance.
Happy Investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com.