A leading renewable energy player faces valuation concerns despite promising growth prospects, as highlighted in a recent brokerage report. While the company is expected to capitalise on India’s booming solar sector, with significant capacity additions projected through 2030, current market pricing suggests potential overvaluation, prompting a cautious investment outlook.
Share Price Movement
The share price of Premier Energies Limited hit an intraday low of 2.27 percent to Rs. 1,275.45 per share on Wednesday, an decrease from its previous close of Rs. 1,305.15 per share. The market capitalisation now stands at approximately Rs. 57,642 crore as of January 08, 2025.
What’s Driving the Price Drop?
Kotak Institutional Equities advises a “Sell” on Premier Energies, setting a target price of Rs. 770, reflecting a potential downside of 41%. Despite projecting a robust 44% CAGR for Premier Energies from FY24 to FY30, the broking cites elevated valuations as a concern.
It highlights that India’s solar sector is poised for significant growth, with utility-scale solar capacity additions expected to achieve an 18% CAGR by FY30, underscoring opportunities for long-term expansion in the industry.
Financial Highlights
According to its recent filing, in the quarter ending September 2024, Premier Energies’s consolidated revenue from operations has increased by 120 percent YOY from Rs. 694 crore in Q2 FY24 to Rs. 1,527 crore in Q2 FY25 and decreased by 7.84 percent QoQ from Rs. 1,657 crore in Q4 FY24.
The company’s consolidated net profit has increased by 288 percent YoY, from Rs. 53 crore in Q2 FY24 to Rs. 206 crore in Q2 FY25. As compared to the last quarter of 2025, the company’s net profit has increased by 4.04 percent QoQ from Rs. 198 crore.
The average price-to-earnings (P/E) ratio in the power generation and Supply industry is 32. which is more than Premier Energies’s current P/E ratio of 230.97.
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Market Outlook
India is driving the global solar revolution, ranking 4th in solar power capacity worldwide. Between 2018 and 2023, solar capacity surged from 21,651 MW to 70,096 MW. Policies like the Production Linked Incentive (PLI) Scheme are boosting domestic manufacturing, with 39,600 MW capacity allocated under PLI Tranche-II.
Solar parks, targeting 38 GW by 2026, are fostering investments and affordability. With declining costs and enhanced technology, India is poised to achieve 500 GW renewable energy by 2030, paving the way for a greener future.
Shareholding Pattern
As of the September 2024 shareholding pattern, Premier Energies Limited is primarily held by the promoters at 64.25 percent, foreign institutional investors hold 3.08 percent, and the public with 25.07 percent.
About Company
Premier Energies, established in 1995 and headquartered in Hyderabad, Telangana, is a leading solar energy manufacturer in India. They specialise in producing monofacial and bifacial solar modules and providing EPC and O&M services. With an annual production capacity of 2 GW for solar cells and 3.36 GW for modules, they serve clients like NTPC, TATA Power Solar Systems, and Panasonic, exporting to 30 countries.
Their future plans include building a 4 GW facility for solar PV TOPCon cells and modules in Hyderabad. Committed to sustainability, Premier Energies plays a crucial role in advancing renewable energy and reducing carbon emissions globally.
Written By Fazal Ul Vahab C H
Disclaimer
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