The Indian solar companies continue to be in the spotlight after the recent US tariff action. The stocks saw sharp knee jerk reaction after the US Department of Commerce announced a preliminary countervailing duty of 126% on solar imports from India. However, leading domestic brokerage house Motilal Oswal outlined that the actual impact could be limited for both Waaree Energies and Premier Energies
Let’s take a look at why the brokerage house sees limited impact and the investment rational now –
Waaree Energies vs Premier Energies: Motilal Oswal price target, valuation view
Motilal Oswal has valued Waaree Energies by splitting its business into parts. It has assigned a 13x FY28 estimated EBITDA multiple to its India module business, 12x to its US module operations in line with global peers, and 10x to its new ventures. After factoring in net debt, this exercise leads to a target price of Rs 3,514 per share. This implies over 27% upside from current levels for Waaree Energies
For Premier Energies, the same Sum-of-the-Parts approach has been used. According to Motilal Oswal, its domestic module arm is valued at 13x FY28 estimated EBITDA – a premium of nearly 25% over global peers – while its new business segment, largely driven by battery manufacturing (around 63% contribution), is valued at 10x. Based on these assumptions, the brokerage has set a target price of Rs 1,000 per share. This implies over 36% upside for Premier Energies from current levels.
Motilal Oswal: The 126% duty – Big number, limited impact?
The proposed 126% countervailing duty applies only if the solar modules exported to the United States use solar cells manufactured in India.
The brokerage house in its report noted, “Waaree Energies does not use India-made cells for sales in the US, so the 126% rate does not apply to the company.”
Waaree Energies earns roughly one third of its revenue from the US market, but for these supplies, it sources cells from countries where tariffs are in the 10-15% range. The modules are then manufactured either in India or at its US facility.
Premier Energies is even less exposed. According to the brokerage report, only about 1% of its revenue comes from overseas markets. This means the tariff development has minimal direct relevance for its earnings.
Motilal Oswal on Waaree Energies: What the management has said
Waaree Energies recently addressed investor concerns in a conference call. The brokerage highlighted that “No potential impact on margins expected.” It also noted that during a previous period when a 50% tariff was in place, “nothing had changed for WEL with respect to commercial numbers.”
Management has also clearly stated that “there has been no material impact on Waaree Energies’s ability to service its US order book.” Its US module manufacturing capacity currently stands at 2.6 gigawatts and is expected to increase to 4.2 gigawatts in the next one to two quarters.
Importantly, according to the brokerage note there has been “no change in capex plans due to tariffs or other external developments.”
Motilal Oswal on solar sector: The larger industry context
The United States remains an attractive solar market. Annual module demand was around 50 gigawatts and is expected to rise to 70-80 gigawatts over the next few years, driven by data centres and increasing use of artificial intelligence.
While the US has module manufacturing capacity of 50-55 gigawatts, it lacks enough cell and wafer capacity. As a result, it continues to import cells. Strict compliance rules, especially around sourcing from companies with significant Chinese ownership, further increase the importance of alternate suppliers such as India.
Conclusion
According to the brokerage report, both companies appear relatively insulated from the immediate tariff impact. One of the key points to remember is that the duty is applicable for companies using India-made cells for sales in the US. This is a key factor why the impact is likely to be limited.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.