Anand Rathi bullish on renewables; starts coverage on Emmvee, Vikram Solar

Analysts at Anand Rathi see strong long-term growth in India's renewable energy sector. They have initiated coverage on Emmvee Photovoltaics with 'Buy' and Vikram Solar with 'Hold' ratings

Anand Rathi initiates coverage on Emmvee Photovoltaics, Vikram Solar

  India's renewable energy sector is poised for sustained long-term growth despite concerns about moderation in power demand amid oversupply, and infrastructure bottlenecks, according to analysts at Anand Rathi Share and Stock Brokers.

 

The brokerage believes that several risks in the sector may be overstated, as structural shifts in power consumption and policy support continue to underpin long-term demand for renewable capacity.

 

“Headline grid demand captures only utility-scale consumption and ignores captive plants and non-grid demand. Incremental demand from sources such as data centres, green hydrogen and rooftop solar is expanding rapidly, suggesting that headline grid demand masks composition shifts in the country’s electricity consumption,” the brokerage said in its report.

 

 

Peak power demand in India, the report noted, is projected to reach nearly 458 Gigawatts (Gw) by 2032, implying a strong pipeline for capacity additions across renewable technologies.

 

Against this backdrop, Anand Rathi has initiated coverage on two solar manufacturing companies: Emmvee Photovoltaics and Vikram Solar.

 

Emmvee Photovoltaics initiated with ‘Buy’

Anand Rathi Stock Brokers initiated coverage on Emmvee Photovoltaics with a ‘Buy’ rating, and a share price target of ₹307, lauding the company’s early move into advanced solar cell technology and its strong order book visibility.

 

Emmvee Photovoltaics, it said, has already commissioned a 2.9 Gw TOPCon cell facility and plans to scale it up to 8.9 Gw by FY28. The company currently operates around 10.3 Gw of solar module capacity, which is expected to expand to roughly 16.3 Gw by FY28.

 

The brokerage said the company’s focus on advanced technology could help it differentiate itself from peers in a competitive solar manufacturing market.

 

“Emmvee is one of the first companies to introduce TOPCon cell technology in India through a technical tie-up with Germany-based Fraunhofer ISE,” the report noted.

 

While the company’s use of German manufacturing equipment requires higher upfront capital expenditure, it supports better operational efficiency and structurally stronger margins.

 

Importantly, the company has an order book of about 9.3 Gw, which provides revenue visibility over the coming years. Anand Rathi expects the company’s revenue to grow sharply as it ramps up capacity and expands its presence in the domestic content requirement (DCR) segment.

 

“Emmvee has traded at around 30 per cent discount to industry leaders due to its smaller scale, with the gap likely to persist given limited exposure to wafers–ingots, BESS, and downstream services; the key margin drivers over the next 3-5 years. However, advanced cell technology, higher module efficiencies, and improving CUFs support near-to-medium-term competitiveness,” the brokerage said.

 

That said, Emmvee’s relatively modest operating cash flow conversion and higher inventory levels could weigh on its financial profile during the expansion phase, Anand Rathi cautioned.

 

Vikram Solar initiated with ‘Hold’

Meanwhile, Anand Rathi initiated coverage on Vikram Solar with a ‘Hold’ rating, citing a more balanced risk-reward outlook due to its aggressive capital expenditure plans and rising leverage.

 

Vikram Solar currently operates around 9.5 Gw of module manufacturing capacity and plans to expand this to 15.5 Gw by FY27. The company is also investing heavily in upstream integration, including a 12 Gw solar cell facility and energy storage initiatives.

 

“Vikram Solar currently operates as a pure-play module manufacturer and plans to expand module capacity from 9.5 Gw to 15.5 Gw. The firm’s long-term strategy includes building an integrated battery energy storage system (BESS) manufacturing capability (7.5 Gwh by H2FY29, scaling to 30 Gwh post FY30), which could strengthen its positioning in the evolving renewable ecosystem,” the brokerage said.

 

However, the brokerage flagged concerns over the company’s higher debt levels. Vikram Solar plans around ₹10,800-crore capex through FY29, with nearly two-thirds (65 per cent) of the funding expected to come from debt.

 

This, Anand Rathi said, implies a debt-to-equity ratio of 1.4 by FY28, resulting in high finance cost and restricting net profit CAGR to 74 per cent over FY25-28e.

 

“Incremental leverage required to fund these expansion plans may lead to higher finance costs, potentially constraining profit growth over the medium-term,” the brokerage said.

 

Sector outlook remains constructive

Overall, Anand Rathi maintained its constructive view on the renewable energy manufacturing ecosystem, saying that concerns about structural oversupply may be overstated.

 

The brokerage noted that demand for solar modules tends to exceed headline installation figures due to factors such as DC-AC conversion requirements, overloading in firm renewable energy projects and rising captive demand.

 

“Module demand exceeds headline additions due to DC/AC conversion, FDRE overloading and captive demand,” the report said, adding that this translates into a significantly higher annual requirement for manufacturing capacity.

 

At the same time, bottlenecks in solar cell and wafer production, along with rapid technology shifts, are likely to limit effective supply growth.

 

As a result, Anand Rathi expects consolidation within the industry rather than a prolonged oversupply cycle.

 

Watch the risks

On the downside, the brokerage said that certain structural challenges could influence the sector’s trajectory, including grid evacuation constraints, intermittency in renewable generation, and the need for large-scale energy storage.

 

Transmission infrastructure remains a key constraint, with pooling substations and grid readiness often delaying renewable project commissioning despite strong policy support.

 

Despite these hurdles, the brokerage believes India’s renewable energy transition will remain gradual and reliability-focused.

 

Thermal power, it noted, will continue to serve as the grid's backbone. near term, while renewables drive most incremental capacity additions over the coming decade.