Can Premier Energies shares recover after hitting an all-time low?

Synopsis: Premier Energies is currently trading near its all-time low. The business continues to report strong operational metrics, but the company is facing a much wider issue in the solar ecosystem, which is weighing down its performance.

When a share drops to a new low after previously being a high-flying stock, it is common for investors to question the company’s investment thesis. This is certainly the case with Premier Energies, whose decline has been high; however, the real question is whether there has been a deterioration in the business fundamentals or if the market simply downgraded its expectations. To determine this, focus less on price action and more on the underlying operating metrics of Premier Energies.

With a market capitalisation of Rs 33,066 crore, the shares of Premier Energies Ltd closed at Rs 729.95 per share, down nearly 3 percent from its previous day’s closing price of Rs 750.25 per share. In the last one year, the stock has corrected over 37 percent, as compared to NIFTY 50’s positive return of 11 percent.

About the company

Premier Energies is not a run-of-the-mill solar EPC provider with low margins; it is a manufacturing-centric renewable power firm. The manufacture of solar cells and modules is Premier Energies’ principal line of business, and only a small amount of revenue is generated by EPC activities. 

As a result of India’s domestic solar manufacturing initiative (through programs like ALMM and domestic content requirements), Premier Energies has aligned itself with this initiative. The company’s alignment with this initiative, along with its successful repositioning, has been a significant contributor to the firm’s strong recent financial performance.

The company is one of the largest integrated cell-module manufacturers in India, boasting over three decades of experience in the industry and a dominant share in India’s solar cell exports (nearly 100 per cent) to USA.

Financial and Other Highlights

The revenue from operations for Premier Energies stands at Rs 1,837 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 1,527 crores, up by about 20 per cent YoY. Additionally, on a QoQ basis, it reported a minor growth of 1 percent from Rs 1,821 crore. Over the past five years, the company has grown its sales by a staggering 47 percent CAGR.

Coming down to its profitability, the company’s net profit stood at Rs 353 crore in Q2 FY26, up from Rs 206 crore in Q2 FY25, which is a growth of 71 percent YoY. Additionally, on a QoQ basis, it reported a net profit of Rs 308 crore, which is a growth of 15 percent. This makes the company touch its highest ever quarterly profit and sales reported by it. Also, over the past five years, the company has grown its profit by a staggering 90 percent CAGR.

Also, as of Q2 FY26, the company’s quarterly cells and modules production stands at 507 MW and 961 MW, respectively, and both are running at an effective capacity utilisation ratio of 79 percent. Additionally, it derives 99 percent of its sales from domestic clients and only 1 percent from exports, which makes it less vulnerable to geopolitical shifts.

In the case of Premier Energies, while in the expansion stage, its balance sheet and cash flow data show that Premier Energies has strong finances, as indicated by its current cash flow and borrowing levels.

Premier Energies has total borrowings of approximately Rs. 1,622 Crores, with a relatively low debt to equity ratio of only 0.47x. With a company focused on product expansion in a manufacturing context, the ratio is very reasonable for a manufacturing organisation.

Premier Energies has established a strong reserve of Rs 3,409 crore for the future and can leverage that strong reserve to purchase other businesses as well as provide a buffer in the event of poor economic performance. 

While the establishment of a solid reserve is critical to any manufacturing business, the strongest area for Premier Energies is cash generation. With a significant increase in cash generated from operations (CFO) over the past four financial years (Rs 1,348 crore in FY25 from Rs 5 crore in FY22), it is clear that Premier Energies is not only generating profits but also generating cash as a result of the increased profits.

In addition to these improvements in working capital management, Premier Energies has also achieved significant improvements to its Total Working Capital ratio over the last two years. 

The reduction in debtor days from 74 in FY20 to 45 in FY25 can be attributed to improved cash conversion efficiencies through fast collections from customers, with reduced support from parent companies. While the inventory days remain elevated at 121, most of this increase can be attributed to the need to stock raw materials and expand production capacity to meet growing market demand rather than weak demand or lack of sales. 

Furthermore, Premier Energies is highly skilled in managing its suppliers and has a strong supplier base, allowing it to sustain its high inventory levels to offset the impact of its supplier funding. Overall, the increase in working capital efficiency, strong working capital management and a record-high 41 percent Return on Capital Employed (ROCE) show that Premier Energies continues to manage its working capital effectively even as it scales rapidly. Also, the company is now trading at a P/E of 29x, which is in line with its industry P/E but trading below its median P/E.

Capacity Expansion 

Premier Energies has solar cell manufacturing capacities of 3.2 GW and solar module manufacturing capacities of 5.1 GW. The Company is establishing a new 7 GW TOPCon solar cell factory located at Naidupeta, Andhra Pradesh, to better compete with other solar manufacturing companies in India. Also, the management stated that the company will have a total cell line capacity of 10.6 GW by September 2026.

The first 4.8 GW of this factory will be operational by June 2026, with the remaining capacity becoming operational in September 2026. When complete, this expansion will bring Premier Energies to a very large scale among Indian manufacturers and make it an important player within India’s domestic solar market with respect to ALMM-II requirements for long-term visibility of demand.

In addition to its new cell production, the Company also plans to expand its module production by constructing a 5.6 GW solar module plant in Seetharampur, Telangana. This facility will be operational by March 2026. The expansion of both solar cell and module production provides for greater vertical integration, reduces the need for reliance on foreign sources of supply, and helps protect margins against raw material price volatility.

To decrease reliance on imports, Premier Energies plans to start making ingots and wafers in addition to their current manufacturing lines that are heavily based on imported materials. A 5 GW ingot wafer plant is being built in Naidupeta, Andhra Pradesh, with plans to open by December 2027. This project fits with the draft ALMM-III (Advanced Level Manufacturing Model III) Policy and should provide better control of costs over the long term, as well as better stability of margins.

In addition to solar panel production, Premier Energies is also diversifying its business into related areas of energy. They are setting up a Battery Energy Storage Systems (BESS) facility in Pune, Maharashtra, that will be completed and operational by June 2026, allowing the company to participate in the rapidly expanding energy storage market in India. 

Additionally, the company is establishing an aluminium manufacturing facility in Telangana, which will produce approximately 18,000 Metric Tonnes of aluminium per annum and be completed by March 2027. This facility will provide an essential raw material that is used for frames of solar panels, as well as reduce the risk of supply chain disruptions.

Finally, this expansion is being supported by strong demand for Premier Energies products. As of September 2025, they have more than 9,100 MW of orders valued at approximately Rs 13,250 Crore, with close to 100 percent of those orders coming from domestic customers. This gives Premier Energies confidence that the additional manufacturing capacity will be filled.

Premier Energies’ initiatives to expand on their market experience and increase their size through the cell, module, upstream material and energy storage will work toward India’s domestic manufacturing initiative. If performed as anticipated, the expansion would greatly enhance Premier Energies’ ability to compete and succeed over the coming years.

Recent Acquisitions

In addition to its existing capability in producing solar panels, it earlier acquired KSolare Energy, in the inverter segment, as a joint venture between Premier Energies (51 percent) and Syrma SGS Technology (49 percent) at an investment of Rs 170 crore. 

KSolare continues to manufacture the majority of residential and commercial inverters from its Pune-based facility. Together, the two companies are committed to developing new product lines, building out their facility by adding additional manufacturing capacity at the same site and expanding into new markets outside of India. Premier Energies wants to take its current capacity of 5 lakh units to double to 10 lakh units by June 2026.

Also, Premier Energies entered the transformers market with its acquisition of 51 percent of Transcon Industries, a transformer manufacturer, for an amount of Rs 500.30 Crores. It represents a key milestone in Premier’s strategy toward becoming a fully integrated provider of clean energy solutions. 

Transcon produces transformers used for multiple applications, including solar and distribution, and through this acquisition, Premier Energies is well positioned to move further downstream with bundled product offerings to power producers, DISCOMs, and industrial users, ultimately leading to a more gradual transition from lower value multiple voltage products through higher value medium, high, and extra-high voltage offerings.

Pricing & Market Pressure 

Another fact to keep in mind is that not just Premier Energies but other notable solar players are also facing pressure, and this is mainly tied to global trends in solar. 

Over the last two years, solar module prices have plunged about 65 percent. This sparked a fierce price war. Companies had to cut prices just to maintain sales. Even major players suffered, as profit margins got so tight that investors began to question whether these companies could survive. That’s a formula for falling stock prices.

Now, things are changing again. Prices have begun to rise, but that brings new challenges. By January 2026, module prices had already risen by 10–15 percent from their lowest point in December, and analysts predict they could increase up to 30 percent by the end of 2026. 

The rise in prices can be attributed to certain nomalities like China is phasing out its VAT export rebate, reducing it from 9 percent to zero by April 2026. Additionally, raw material prices, especially silver, have surged. 

Also, Silver alone now accounts for about 17 percent of the module cost, after its price nearly doubled. Aluminium costs are also climbing, adding to the pressure. So, in conclusion, the recent drop in Premier Energies’ share price appears to be more reflective of an adjustment in expectations than a deterioration of the company’s operations

Conclusion 

The company has maintained its trend of healthy revenue growth and profitability through ongoing improvement of its operating cash flow and strong demand signs, due in large part to a predominantly domestic order book. In addition, the company is also experiencing an aggressive expansion phase that could potentially lead to reduced margins and increased execution risk if there are delays and/or increased costs associated with the construction or commissioning of new solar farms.

Therefore, the market might be taking a more cautious position regarding this company at this point in time instead of displaying an extremely pessimistic view. Nevertheless, there remains an opportunity for the company to recover if it is able to deliver on its expansion plans while maintaining business discipline. Ultimately, the success of this effort will depend significantly on execution and not merely on how investors feel about the company.

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