Nuvama starts coverage on Premier Energies with 'Buy', sees J-curve growth

Nuvama on Premier Energies: Domestic brokerage Nuvama Institutional Equities has initiated coverage on Premier Energies with a ‘Buy’ rating and a target price of ₹1,270, underscoring the company’s aggressive pivot to emerging New Energy opportunities and its potential to ride what the brokerage calls a sector-wide J-curve breakout.

 

The brokerage argues that Premier Energies is strategically positioning itself to capture exponential growth in the New Energy ecosystem, even as its core solar business remains on solid footing. Backed by rapid capacity expansion, deeper backward integration and supportive policies, Premier Energies is expected to deliver a 49 per cent revenue compound annual growth rate (CAGR) and 43 per cent Ebitda CAGR over FY26-28, according to Nuvama.

 

 

A substantial scale-up across modules, cells and wafers, by 27 per cent, 79 per cent and 5GW, respectively, is central to this outlook. Premier’s backward integration into wafers, supported by government-led ALMM and domestic content requirement (DCR) mandates, is seen cushioning margin pressures as competition intensifies. 

 

At the same time, the brokerage believes sectorwide overcapacity fears are overstated, citing the weak response to recent IPOs, Saatvik garnered 6.9x subscription while Emmvee saw just 0.97x, compared with earlier solar IPOs that drew 56-79x bids. 

 

Nuvama said this shift signals that many potential entrants may struggle to raise capital, limiting fresh capacity additions and mitigating oversupply risks.  CATCH STOCK MARKET LIVE UPDATES TODAY

 

Analysts project that Premier will generate ₹8,200 crore in free cash flow between FY26 and FY28, bolstering its ability to fund expansions while preserving balance-sheet strength. Nuvama expects the company’s revenue mix to evolve meaningfully, reducing reliance on modules. Module Ebitda contribution is forecast to fall from 62 per cent in FY25 to 36 per cent by FY30, driven by higher contributions from wafers and cells, which together could rise from 38 per cent to 46 per cent.

 

Meanwhile, Premier’s push into battery energy storage systems (BESS) is expected to add a fresh earnings layer, with BESS contributing about 13 per cent to Ebitda by FY30. Additional forays into transformers and inverters further diversify its portfolio and offer scalable, margin-accretive opportunities. 

 

Nuvama sees these moves as part of a deliberate effort to build a horizontally and vertically integrated New Energy platform capable of participating in upcoming growth cycles across BESS, data centres, green hydrogen and green ammonia.

 

On valuation, the brokerage draws parallels to the IT sector’s Y2K-era premiums, noting that Premier’s 24x FY25 EV/Ebitda reflects expectations of explosive growth ahead of earnings catch-up. With a robust balance sheet, strong cash flow and return on equities (RoE) above 30 per cent, Nuvama estimates that Premier’s FY28 EV/Ebitda multiple could normalise to a more reasonable 10x.

 

Still, the brokerage flags ‘imponderables’ typical of new-age industries, including tariff changes, technology shifts and potential module oversupply, and incorporates sensitivity scenarios based on a long-term free cash flow CAGR of 16 per cent over FY25-45. 

Disclaimer: Target price and stock outlook has been suggested by Nuvama Institutional Equities. Views expressed are their own.