Premier Energies capacity ramp and order momentum support solar growth outlook

Investment View and Key Drivers

Motilal Oswal Financial Services reiterated its Buy rating on Premier Energies Limited (PEL) with a target price of Rs 1,240 per share. The broker’s positive view is based on the limited expected impact from the extension of ALMM-II, rapid solar-manufacturing capacity expansion, a healthy order book and potential battery-manufacturing optionality.

• Limited near-term impact from the deferral of ALMM-II for selected commercial and industrial segments.
• Rapid expansion in solar-cell and module manufacturing capacity.
• Strong order visibility, with the order book supported by diversified customers.
• Potential long-term growth from battery manufacturing and transformer exports.

ALMM-II Impact and Solar Market Outlook

Motilal Oswal believes the deferral of ALMM-II until December 2026 for open-access and net-metering commercial and industrial segments should have only a limited near-term impact on Premier Energies. The affected commercial and industrial market represented about 7 GW of India’s approximately 45 GW of solar installations in FY26.

In contrast, utility-scale solar, PM Surya Ghar rooftop installations and PM-KUSUM are expected to account for about 75–80 per cent of the domestic solar market in FY27 and remain subject to ALMM-II. The broker expects Premier Energies to benefit from the mandate as its solar-cell manufacturing scale increases in 2HFY27.

Capacity Expansion and Growth Outlook

Premier Energies commissioned about 400 MW of solar-cell capacity in January 2026 and recently added about 5.4 GW of module capacity. The new facilities are expected to ramp up meaningfully in early FY27, taking total module capacity to 11.1 GW, more than double the previous level.

Solar-cell capacity is forecast to increase from 3.6 GW at FY26-end to 8.4 GW by Q2 FY27 and 10.6 GW by 2HFY27. Motilal Oswal estimates that this capacity ramp will support revenue and EBITDA CAGRs of 34 per cent and 24 per cent, respectively, over FY26–28E.

Despite the expected growth, the broker expects free cash flow to remain negative for roughly the next three years because of the investment programme.

Order Book and Revenue Visibility

Premier Energies had an order book of Rs 14,000 crore at FY26-end and secured a further Rs 3,000 crore of orders in Q1 FY27. The new orders comprise 1.8 GW of solar cells and modules for delivery during FY27–28.

The order intake is diversified across power producers, module manufacturers, EPC companies and other customers. Motilal Oswal estimates order-book coverage at 1.1 times FY27E revenue and does not foresee material earnings risk over FY27–28. The broker also notes that customers continue to prefer cells from established and reliable manufacturers.

Battery Manufacturing and Other Growth Options

Battery manufacturing is viewed as an additional growth option. Premier Energies held a groundbreaking ceremony on July 9, 2026 for a 6 GWh Battery Energy Storage System container facility. Phase one is expected to be commissioned by the end of CY26, although the ramp-up may be gradual because of certification requirements.

A battery-localisation policy anticipated by 2HFY27 could support domestic manufacturers. Chinese imports remain about 15 per cent cheaper, although an 11 per cent import duty partly narrows the disadvantage. Premier Energies also sees export opportunities in transformers.

Financial Outlook

Premier Energies reported FY26 sales of Rs 7,824 crore, EBITDA of Rs 2,377 crore and adjusted PAT of Rs 1,510 crore, with an EBITDA margin of 30 per cent. Motilal Oswal’s estimates are as follows:

Valuation and Target Price

Motilal Oswal values Premier Energies on a sum-of-the-parts basis, assigning 14 times FY28E EBITDA to domestic modules and 10 times FY28E EBITDA to new businesses. After adjusting for net debt, the valuation produces the Rs 1,240 per-share target price.

The broker considers the valuation reasonable at 10.4 times FY28E EV/EBITDA, given expected margin resilience, growing orders and battery-manufacturing potential.