Whalesbook
Indian Solar Market Splits: Tech vs. Scale
India's solar manufacturing industry is at an important time, balancing rapid expansion with growing competition and fast-changing technology. JM Financial's first sector report shows a clear difference in how analysts view major companies. While the total solar module production capacity is expected to reach 210 GW by early 2026, with cell capacity at 27 GW, JM Financial's analysis suggests that simply being large isn't enough for future growth. In this context, Emmvee Photovoltaic Power, valued at nearly ₹16,100 Cr, stands out. It's projected for a 31% stock gain based on its 'Buy' rating. This is a sharp contrast to Waaree Energies, a market leader by size (Market Cap ~₹95,900 Cr, P/E ~28x), and Premier Energies (Market Cap ~₹44,100 Cr, P/E ~33x), both of which received 'Reduce' ratings. The market has responded to this differing outlook. Emmvee's stock valuation, including a high P/E of 99.67x, might seem high for a 'Buy' rating, but it highlights the other strengths JM Financial focuses on.
Tech Edge Gives Companies an Advantage
JM Financial's valuation approach highlights a key change in the solar industry. The fast adoption of advanced technologies like TOPCon is giving companies a strong edge. About 40% of current production capacity could become outdated as newer, more efficient modules emerge. Emmvee is seen as a technology-driven company, with expected growth in cell and module output, and strong expansion in revenue and profits (EBITDA). Its valuation of 7.5 times FY28 EV/EBITDA reflects its perceived strong technology and integration abilities. In contrast, Waaree Energies and Premier Energies face challenges, even with large growth forecasts and ongoing factory building—Waaree aims for 28 GW module capacity and Premier for 8.2 GW by FY28. JM Financial notes risks in Waaree's plans to expand into new areas and believes Premier's growth is already reflected in its current stock price. The firm points out that companies combining size, control over their supply chain, export strength, ongoing research, and solid finances will likely succeed.
Risks for Waaree and Premier: Margins and Obsolescence
Analysts are concerned that growing competition and price pressure will lower profit margins for Waaree Energies and Premier Energies starting in FY26. While Waaree has substantial cash and expansion plans, its ambitious diversification strategy introduces risks that analysts think limit its immediate stock growth. Premier Energies, despite a strong list of orders, faces similar valuation worries, as its growth prospects are already built into its current stock price. Market conditions suggest higher solar panel prices in 2026 due to policy changes in China, rising shipping, and material costs. This could further reduce profits for less efficient manufacturers. The industry is shifting from focusing on volume to increasing profits through greater control over its supply chain. This move could hurt companies with less advanced production methods or less integrated operations.
What's Next: Technology is Key
JM Financial's view suggests the Indian solar market is splitting into two groups: leaders in technology and integration, and those relying mainly on scale. JM Financial's 'Buy' rating for Emmvee Photovoltaic Power signals confidence in its technology driving better profits. The 'Reduce' ratings for Waaree and Premier suggest their current prices don't fully account for risks like shrinking margins and technology becoming outdated. The sector's future success will likely hinge on companies' ability to adopt new technologies like TOPCon and N-type cells, along with strong control over their supply chain, to maintain profits in a tougher market.