Fujiyama Power Systems earnings beat on rooftop solar demand and channel expansion

Investment View and Valuation

Motilal Oswal Financial Services retained its BUY rating on Fujiyama Power Systems in its August 14, 2026 Q1 FY27 results update. The broker believes the company is well positioned to benefit from strong rooftop-solar demand under the PM Surya Ghar Muft Bijli Yojana, expansion of its distribution network and increasing backward integration.

Following the quarterly earnings beat and improved management guidance, Motilal Oswal raised its FY27E and FY28E EPS estimates by 8% and 5%, respectively. Its target price of Rs 600 is based on 25 times FY28E EPS.

Strong Q1 FY27 Financial Performance

Fujiyama Power Systems reported a strong Q1 FY27 operational and financial performance, with consolidated revenue, EBITDA and adjusted PAT substantially ahead of Motilal Oswal's estimates.

Profitability was supported by lower employee expenses and other expenses, partly offset by an 80-basis-point year-on-year decline in gross margin. EBITDA margin expanded 120 basis points year-on-year to 18.9%, although it was below the broker's 19.5% estimate.

Rooftop Solar Demand and Channel Expansion

The broker attributes growth to volume-led demand, traction under the PM Surya Ghar scheme, new distribution coverage in Odisha and Uttarakhand, and improved after-sales capabilities.

• Management added more than 80 distributors, over 1,000 dealers and more than 30 exclusive Shoppes in Q1 FY27.
• The channel-partner base exceeded 10,100 as of June 2026, against a target of more than 15,000 channel partners by FY28.
• Around 90% of revenue is generated from the B2C segment.
• The company has approximately 10% on-grid market share and is focused on the rapidly growing on-grid market.

Manufacturing Capacity and Backward Integration

Manufacturing expansion is a central operating driver for Fujiyama Power Systems. The company commissioned a 2 GW solar-panel facility at Ratlam in Q1 FY27 and a 2 GW power-electronics facility in August 2026. This increased total solar-panel and power-electronics capacities to 3.5 GW and 4.2 GW, respectively.

Initial utilisation at the new facilities is expected to be approximately 40-50% on one shift, with ramp-up dependent on demand. Solar-panel utilisation, excluding Ratlam, was approximately 70-80%. The 2 GW lithium-ion battery facility at Ratlam is expected to be commissioned by Q2 FY27.

The existing 1 GW solar-cell facility was operating at 80% utilisation and is entirely consumed internally for DCR panels. The TOPCon cell manufacturing building, with 1.2 GW capacity, has been completed. Machinery has been ordered, and commissioning is expected within eight to nine months.

Guidance and Strategic Investments

Management raised its FY27 revenue-growth guidance to 70% from 50%. It expects margins to sustain and gradually improve through backward integration and operating leverage, while passing some benefits to customers. Management cautioned that non-DCR margins are declining, but expects in-house DCR cells to support the margin profile.

The company acquired an additional 31% stake each in Zayo Energy and Zayo Cables, increasing its ownership in both businesses from 19% to 50%. These businesses supply solar-module components. Land acquisition is under way, with production expected from FY28. Management expects revenue of Rs 4,000-5,000 million from these businesses. Total capex is estimated at Rs 1,800-2,000 million, with Fujiyama funding 50% of the investment.

Key Risk: Bawal Plant Fire

The May 2026 fire at the Bawal plant resulted in a Rs 1,400 million net carrying-value loss, which was recognised as an exceptional item. The assets are insured, the survey has been completed, and management expects finalisation and full recovery of the insurance claim by FY27-end.

Restarting the facility will take time, and the company is considering a leased plant. The timing of the restart and insurance recovery therefore remain important execution considerations.

Growth Outlook

Motilal Oswal forecasts FY26-28 revenue, EBITDA and adjusted PAT CAGR of 51%, 55% and 57%, respectively. The outlook is supported by a 15 GW opportunity from five million pending PM Surya Ghar installations, DCR manufacturing, channel expansion and margin gains from backward integration.