The brokerage firm Nuvama has initiated coverage on Premier Energies, a renewable energy company with a ‘Buy’ rating. The brokerage has set a target price of Rs 1,270 per share to the stock.
The brokerage’s target suggests an upside potential of about 32%. According to the brokerage report, Premier Energies is entering a phase where the “J-curve-like exponential growth in New Energy” could reshape its long-term earnings trajectory.
Let’s take a look at the key reasons why the brokerage is bullish on the stock and what is the rationale behind it –
Nuvama on Premier Energies: Strategic pivot
The brokerage house in its report noted that Premier Energies is no longer limiting itself to traditional solar businesses. Instead, the company is shifting toward a broader new-energy ecosystem. The brokerage highlighted that “Premier is tactically pivoting to capitalise on the J-curve-like exponential growth in New Energy even as core solar looks sanguine.”
The report also pointed out that rising manufacturing capacity, stronger backward integration and steady realisations supported by Domestic Content Requirement (DCR) policies form the backbone of the company’s growth forecast for the coming years.
Nuvama on Premier Energies: Revenue and earning visibility
The brokerage sees a sharp rise in Premier’s financial performance over the next two years. As per the report, “its rising capacity, backward integration and steady DCR-linked realisation underpin our FY26–FY28 revenue/EBITDA CAGR of 49%/43%.”
Nuvama expects the company’s module, cell and wafer capacities to scale up quickly, adding “We forecast Premier’s FY26–28 revenue/EBITDA shall turn in 49%/43% CAGR driven by a 27%/79%/5GW surge in module/cells/new wafer capacity.”
Government support through policies such as the Approved List of Models and Manufacturers (ALMM) and DCR-linked mandates may help cushion margins even as competition increases.
Nuvama on Premier Energies: Why overcapacity fears may be exaggerated
The brokerage also argued that sector wide concerns about excess manufacturing capacity may be overstated. It noted that companies raising funds through initial public offerings have recently seen weak subscription levels.
According to the report, “weak demand for recent IPO fund-raises (Saatvik 6.9x/Emmvee 0.97x versus previous IPO subscriptions at 56–79x) shall starve future competitors of critical funding.”
Nuvama on Premier Energies: Valuation outlook
The report further added that Premier Energies is currently valued at higher multiples, but this may be justified due to the company’s position in an early-stage, high-growth industry.
It also expects that as earnings expand and cash flows remain healthy, valuations will normalise, adding, “Based on our projections, we reckon FY28 EV/EBITDA shall reflect a reasonable 10x.”