Vikram Solar Share: Can global market entry and BESS diversification drive long-term growth?

Synopsis: Vikram Solar’s growth story hinges on aggressive capacity expansion, backward integration, BESS diversification, and global market entry, while execution of heavy capex and managing near-term industry overcapacity remain the key monitorables. 

The shares of this small-cap company, which is primarily engaged in manufacturing solar PV modules and also provides EPC and O&M services, were in focus after the brokerage firm saw around 21.5 per cent upside potential based on strong earnings visibility. 

With the market capitalization of Rs. 6728 crores, the shares of Vikram Solar Ltd were trading at Rs. 186 per share which is 54.4 percent discount from its 52-week high of Rs. 408 per share and is trading at a P/E of 14.8 whereas industry P/E stands at 22.9

Brokerage target: PL Capital has maintained its BUY rating on Vikram Solar with a target price of Rs. 226, reflecting confidence in the company’s long-term growth driven by capacity expansion, backward integration, BESS diversification, and global market entry. Let’s now look at the key rationale and growth drivers behind this bullish view.

Brokerage view

The brokerage maintains a positive long-term outlook on Vikram Solar, supported by strong growth visibility from capacity expansion, deeper backward integration, diversification into BESS, and planned global market entry. While near-term margins may remain under pressure due to industry overcapacity and plant stabilization, the broader investment thesis continues to rest on execution of its capex pipeline and the company’s ability to translate scale into sustainable profitability.

Domestic solar manufacturing demand outlook

The demand side for India’s solar market continues to look healthy. The utility-scale solar capacity is expected to increase from ~106 GW in FY25 to ~181 GW by FY30E. Moreover, the commercial and industrial segment is also expected to sustain at 8-10 GW per annum. Additionally, the rooftop segment is also expected to scale up further in FY27 and FY28. The total module demand per annum is expected to remain at ~75 GW DC. Thus, the solar sector continues to have healthy structural demand growth.

However, it has also been very clearly indicated in the report that there is a problem of overcapacity in the short term. Under ALMM-I, the domestic listed module capacity is already at ~173 GW, which has the potential to increase further to over 200 GW by FY28. Moreover, the capacity addition in ALMM-II is also happening at a very fast pace. Thus, there is a possibility of overcapacity in the short term.

Capacity ramp-up and backward integration

One of the major areas discussed in the report is the company’s capacity expansion roadmap. As on December 2025, the company’s ~9.5 GW module manufacturing capacity is operating at 88-89 percent, indicating strong demand support. In addition, the newly commissioned 5 GW Vallam module facility is in the ramp-up phase, which will support the company going forward.

The next major milestone is the 9 GW cell manufacturing facility, which is progressing as planned. The civil work is expected to be completed by September 2026, followed by the installation and commissioning process in October-November 2026. The initial ramp-up is expected between December 2026 and March 2027, with the first cell planned to be manufactured in December 2026.

This is an important expansion as the company is expected to achieve ~70 percent backward integration through this facility, which will help the company expand its margin in the medium term.

In addition to the above, the company is also planning further expansion with the addition of 3 GW cell capacity in FY28E and ~12 GW wafer/ingot capacity in phases by FY29-30E. The company is on the right track with its expansion strategy, which is expected to help the company significantly enhance profitability once the operations are stabilized.

Capex pipeline and funding

Total capex required for the planned 6GW module and 12GW cell capacities is estimated to be ~Rs. 6700 Crores, which is to be funded through ~Rs. 3800 Crores debt and the remaining through equity and IPO proceeds. The change in the technology shift from importing the machinery to setting up domestic equipment for the 9GW cell lines has also resulted in ~10 percent more capex compared to the original plan.

This high capex program is one of the major reasons the report repeatedly highlights the importance of discipline in terms of execution and return visibility, as the company’s ability to leverage this investment into efficient earnings growth remains one of the major market monitorables.

BESS expansion and diversification

The initial plan will comprise the assembly of the 5GWh BESS, which will expand to ~7.5GWh by FY29 and expand to ~15GWh in the next five years. This section is also expected to add to the revenue streams other than solar modules and enhance the margin mix.

In the report, the structural industry opportunity is also discussed. It is mentioned that the BESS capacity in India is expected to grow to ~321GWh by FY35, up from 27GWh in FY26.

Order book and business mix

The current order book size is ~10.6GW, which, according to this report, is largely domestic in nature. Segment-wise, IPP projects contribute ~55 percent, C&I ~21 percent, distribution ~13 percent, government projects ~6 percent, and EPC ~5 percent.

The report further highlights that in terms of the segment-wise contribution, there has been a significant increase in the contribution from the C&I segment over the last 12 months, which has increased from ~4 percent to ~21 percent, indicating a higher level of business diversification.

Cost optimization and operational efficiency

The company has made some operational improvements in the plant in Vallam. For instance, the company has reduced the manpower intensity from ~70 to ~40 through the use of automated and self-feeding lines, resulting in an approximate 50 percent reduction in conversion costs over 12 years. The new plant has a 42 percent reduced manpower requirement, 61 percent faster cycle time, and up to 80 percent fewer defects.

Financial outlook and estimates

On the financial front, the report has estimated the revenue/EBITDA/PAT CAGR for FY26-FY28E at 65.1 percent/60.5 percent/19.7 percent. However, EBITDA estimates for FY27 and FY28 have been reduced by 4.9 percent and 7.0 percent, respectively, due to lower EBITDA per watt assumptions as the cell manufacturing plant is expected to stabilize only by FY28.

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