Recommendation from Capital Goods Sector

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year. [EasyDNNnews:PaidContentStart]

PREMIER ENERGIES LTD : POWERING INDIA’S Solar MANUFACTURING SCALE-UP

HERE IS WHY
✓  Strong Capacity Expansion Pipeline
✓  Robust Order Book Visibility
✓  Beneficiary of Renewable Policy Tailwinds

I ndia’s renewable energy sector is witnessing a structural upcycle, driven by aggressive government targets, rising power demand and increasing focus on energy transition. With India targeting 500 GW of renewable energy capacity by 2030, solar energy remains a key contributor to this growth. The sector continues to benefit from strong policy support, and these policies are aimed at reducing import dependency and strengthening domestic manufacturing capabilities. Against this backdrop we recommend Premier Energies Ltd as our Choice Scrip.

Premier Energies is one of India’s leading integrated solar manufacturers with a strong presence across the solar value chain, including solar cells and modules. The company has built a strong track record in solar manufacturing with over three decades of industry experience and continues to focus on technology upgradation and scale expansion.

On March 30, it has commissioned a 5.6 GW solar module facility in Telangana, taking total module capacity to 11.1 GW, positioning it among the largest players in the domestic market. Additionally, a 7 GW cell manufacturing plant in Andhra Pradesh is under execution and is expected to be completed in phases, with 4.8 GW targeted by June 2026 and the remaining capacity by September 2026. This expansion will significantly enhance backward integration and improve margin profile. The company is also moving towards deeper integration across the solar value chain. It has initiated work on a 10 GW ingot and wafer manufacturing facility, which is expected to reduce dependence on imports and provide better control over costs and supply chain. In addition, Premier Energies is expanding into adjacent segments such as Transformers and battery energy storage systems (BESS), which are expected to emerge as key growth drivers over the medium term.

As of Q3FY26, the company has an order book of approximately ₹13,700 crore. In Q3FY26, revenue stood at ₹1,966 crore with growth of 12.39 per cent YoY, while EBITDA came in at ₹623 crore, translating into healthy margins. Profit after Tax stood at ₹392 crore with growth of 53.44 per cent YoY. Company has outlined a capital expenditure plan of approximately ₹12,500 crore over the next three years to expand capacity, enhance backward integration, and diversify into new energy solutions.

From a financial standpoint, the company maintains strong return ratios, with ROCE at 41.1 per cent and ROE at 53.6 per cent, reflecting efficient capital utilisation and strong profitability. Over the last three years, it has delivered a robust sales CAGR of 106 per cent and profit CAGR of 297 per cent, indicating strong growth momentum and scalability of its business model. The company maintains a relatively comfortable balance sheet with a debt-to-equity ratio of 0.47x, providing adequate flexibility to support its ongoing expansion plans.

From a valuation perspective, the stock is currently trading at a P/E of 30.3x, compared with the industry average of 22.1x, while remaining below its three-year median P/E of 46x. The PEG ratio of 0.10 suggests that the current valuation remains attractive relative to its strong earnings growth. While valuations reflect the ongoing growth trajectory, the company’s strong execution, capacity expansion pipeline, and favourable industry tailwinds provide visibility for sustained growth. With its integrated manufacturing capabilities, strong order book, ongoing capacity expansion, and alignment with India’s renewable energy ambitions, Premier Energies is well positioned to benefit from the structural growth in the solar sector. Considering these factors, we recommend a BUY.

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