Motilal Oswal has started coverage on Fujiyama Power Systems with a target price of Rs 600. The stock is in focus following a 125% revenue surge in Q1 FY27, largely driven by the government's rooftop solar initiatives. While growth is strong, investors should be aware of operational challenges, including recent significant damage to the company's Bawal plant.
Motilal Oswal has initiated coverage on Fujiyama Power Systems, which trades on the NSE and BSE, with a 'Buy' rating and a price target of Rs 600. This update follows a period of rapid expansion for the company, which specializes in the rooftop solar segment. The brokerage’s outlook is based on the company's recent strong financial performance and its ability to capture demand from government schemes.
In the first quarter of fiscal year 2027, the company reported a revenue of Rs 1,345.7 crore, marking a 125.3% increase compared to the same period last year. Its operating profit, or EBITDA, surged 2.4 times year-on-year to Rs 2.5 billion, with an operating margin of 18.9%. These figures highlight a period of fast growth, supported by the PM Surya Ghar Muft Bijli Yojana, which has boosted demand for solar installations across India.
The company’s growth strategy includes increasing its distribution network into states like Odisha and Uttarakhand and focusing on backward integration, such as local manufacturing of solar cells. This move is intended to reduce reliance on imports and improve profit margins. Looking ahead, the company is also working on expanding its manufacturing capacity at its Ratlam facility in Madhya Pradesh.
However, investors should also consider operational risks. In May 2026, a major fire incident occurred at the company's manufacturing plant in Bawal, causing damage estimated at Rs 1.4 billion. While the company has treated this as an exceptional item and expects to receive insurance payments, the incident highlights the risks inherent in large-scale manufacturing and infrastructure management. Additionally, the company’s heavy dependence on government subsidy schemes creates a policy risk, where any change in support could impact future demand.
Moving forward, the primary factors for investors to watch include the status of the insurance recovery from the Bawal plant fire, the timely expansion of the Ratlam manufacturing site, and the company's ability to maintain its profit margins while competing in the solar sector. The company’s long-term performance will depend on its ability to manage these operational challenges while sustaining the current pace of growth in the rooftop solar market.