Premier Energies solar capacity expansion supports order-book-led earnings growth outlook

Investment View and Target Price

Prabhudas Lilladher maintained its Accumulate recommendation on Premier Energies and revised its target price to Rs1,131 from Rs1,138. The positive view is supported by strong execution, domestic DCR demand, a sizeable order book, capacity ramp-up, operating leverage and backward integration.

The broker values Premier Energies at 12 times March 2028E EV/EBITDA, implying 22 times FY28E PE.

Q1 FY27 Financial Performance

Premier Energies reported Q1 FY27 revenue of Rs24.6 billion, up 35.3 per cent year on year and broadly in line with PL Research's estimate of Rs24.7 billion. EBITDA increased 30.3 per cent year on year to Rs7.1 billion, 1.1 per cent above the estimate. EBITDA margin declined 110 basis points year on year to 29.0 per cent, but was 50 basis points above the broker's estimate.

Reported PAT grew 50.4 per cent year on year to Rs4.6 billion, exceeding the broker's estimate of Rs3.8 billion by 22.7 per cent. Domestic revenue was Rs24.4 billion, up 35.3 per cent year on year.

Module and cell revenue were Rs17.4 billion and Rs5.9 billion respectively, while Transcon contributed Rs985 million.

Capacity Expansion and Execution

Premier Energies commissioned its 5.6 GW fully automated Seetharampur module facility, increasing total module capacity to 11.1 GW. Its 7 GW TOPCon cell facility at Naidupeta was in advanced commissioning, with trial runs expected later in August 2026 and first revenue targeted from September 2026.

Q1 FY27 module production was 953 MW and cell production was 844 MW. The Naidupeta TOPCon cell facility is targeted to reach 50-60 per cent utilisation by November 2026 and 70 per cent by March 2027.

Order Book and Demand Visibility

The order book stood at Rs150 billion, or 9.9 GW, at June 2026. It was entirely domestic and increased 7.1 per cent sequentially. The order book comprised 40 per cent modules, 58 per cent cells and 2 per cent transformers. Q1 FY27 order inflow was Rs33.0 billion.

Management indicated that approximately 40-45 per cent of the order book is scheduled for FY28 execution, supporting revenue visibility beyond FY27. DCR demand remained strong, with sales extending into FY28. PM Surya Ghar, PM KUSUM and commercial and industrial projects are expected to support the FY27 and FY28 demand outlook.

Margins, Realisations and Capital Expenditure

Management guided for sustainable EBITDA margins of approximately 29-30 per cent, supported by scale, operating leverage and backward integration. Non-DCR module realisations softened because of industry oversupply, whereas DCR module and cell prices remained stable. The temporary ALMM-II relaxation resulted in an influx of non-DCR module orders expected over the following two to three months.

Net debt increased to Rs16.4 billion at Q1 FY27 from Rs10.4 billion at Q4 FY26. Q1 FY27 capital expenditure was Rs15.0 billion, principally for the Seetharampur and Naidupeta solar projects and Transcon.

Transcon and Battery Energy Storage

Following consolidation, Transcon reported Q1 FY27 revenue of Rs1.1 billion and an EBITDA margin of 27 per cent. Management expects transformer revenue to more than triple from FY26 over the next three years through capacity expansion, a higher HV and EHV product mix and export opportunities.

Phase I of the 6 GWh BESS project was under way, with a technology partner expected to be finalised within two to three months.

Earnings Outlook and Valuation

PL Research raised its FY27E and FY28E EPS estimates by 8.9 per cent and 3.8 per cent respectively, citing better execution and earnings visibility. The broker forecasts FY26-FY28E revenue, EBITDA and PAT compound annual growth of 46.2 per cent, 37.4 per cent and 25.2 per cent respectively.

The revised target price of Rs1,131 reflects the broker's valuation of Premier Energies at 12 times March 2028E EV/EBITDA, implying 22 times FY28E PE.