Nomura initiates coverage on Waaree Energies, Waaree Energies; predicts upside of up to 16%

Global brokerage Nomura has initiated coverage on solar module manufacturers Waaree Energies Ltd and Premier Energies Ltd, forecasting a potential upside of up to 16%. In its September 3 report, Nomura assigned a ‘Buy’ rating on Waaree Energies and a ‘Neutral’ rating on Premier Energies, citing India’s power demand, expected to grow at a CAGR of 6% through FY30, as a key growth driver.

With a price target of Rs 3,710, analysts at Navuma forecast a 16% upside from its last close of Rs 3,205. Despite the positive outlook, the stock ended 0.6% lower on Thursday.

For Premier Energies, analysts at Nomura see a potential upside of 9%. However, the stock closed about 1.5% lower on Thursday.

Waaree’s outlook remains strong, supported by a robust order book and policies sustaining 70–80% domestic revenue. Rising supply may pressure realisations, but backwards integration and a focus on the high-margin Domestic Content Requirement (DCR) segment should maintain efficiency and profitability. Nomura, however, flags tariff uncertainties as a key risk.

Nomura projects Waaree’s EBITDA to expand at a CAGR of 43% between FY25 and FY28F, supported by operational scale-up and enhanced unit economics.

Talking about Premier Energies, Umesh Raut and Aritra Banerjee of Nomura said, “We expect Premier Energies to sustain its dominant position in the high-realisation of DCR market to FY28F, which will act as its key differentiator.”The brokerage expects the company to continue witnessing industry-leading margins of 26–28% to FY28F. Nomura cautioned that post-FY28F, margins may contract sharply due to lower realisations amid intensifying competition.“To meet the robust demands, we expect the country to add 309GW in installed capacity over FY25-30,” Nomura said. “Of this, renewable energy should account for the bulk of the additions, in line with the country’s target of 500GW by 2030. As solar energy (SE) has strong policy support and entails the lowest tariffs among renewable segments, we expect it to lead India’s energy transition,” the brokerage added.

“Consequently, we expect India’s installed solar energy capacity will almost triple to 293GW in FY30F from 106GW in FY25F. This augurs well for solar PV equipment demand, as we believe solar module demand is set to touch 58GW in FY28.

In its note, Nomura acknowledged that Indian manufacturers remain less cost-competitive than imports, but government support via the Approved List of Module Manufacturers (ALMM), Basic Customs Duty (BCD), Domestic Content Requirement (DCR), and Production-Linked Incentive (PLI) has encouraged capacity expansion through backwards integration and safeguarded domestic demand.

Nomura points to several key drivers behind India’s rising power demand. Green hydrogen, with a 5 million-ton annual target, could add 125GW of renewable capacity, EV adoption may boost incremental demand sixfold to 10TWh by FY30F, and data centre growth from digitalisation, AI, and IoT will further increase energy needs.

(Disclaimer: Recommendations, suggestions, views, and opinions are those of the experts and do not reflect the views of The Economic Times.)