Solar Sector Outlook 2026: Nuvama Backs Waaree & Premier

A Multi-Decadal Opportunity in Indian Solar

Nuvama Institutional Equities has reaffirmed its positive outlook on India's solar manufacturing sector, describing it as a "multi-decadal opportunity." The brokerage has maintained 'Buy' ratings on key players including Waaree Energies Ltd, Premier Energies Ltd, and Vikram Solar Ltd. This optimism persists despite acknowledging near-term challenges such as margin pressures from rising input costs and the complexities of international trade duties. The sector's long-term growth is underpinned by strong government support, expanding domestic demand, and ambitious capacity expansion plans by the leading companies.

Strong Financial Projections Amidst Headwinds

For the fourth quarter, Nuvama forecasts that aggregate EBITDA for module manufacturers will grow by a significant 38% year-on-year, driven primarily by higher production volumes. However, a sequential decline of 15% is also anticipated due to rising input costs and technological transitions. This mixed outlook highlights a sector in a dynamic phase of growth, balancing rapid expansion with operational challenges. The underlying demand and production ramp-up are expected to fuel top-line growth, even as profitability margins face temporary compression.

Waaree Energies: Leading the Charge

As India's largest solar module manufacturer, Waaree Energies is at the forefront of this expansion. Nuvama projects the company's Q4 revenue to reach ₹8,000 crore, a 100% year-on-year increase. EBITDA is expected to rise by 62% YoY to ₹1,500 crore, supported by a remarkable 83% surge in solar module production to 3.8 GW. Despite this strong annual growth, the company may see a 22% sequential dip in EBITDA, attributed to a temporary decline in cell output during a technology upgrade and higher input costs.

Waaree's strategic vision extends beyond modules. The company is undertaking a massive ₹25,000 crore capital expenditure plan over the next few years, funded by strong operating cash flow and IPO proceeds. This investment will fuel diversification into adjacent green energy segments like battery energy storage systems (BESS), inverters, and green hydrogen electrolysers. With a robust order book exceeding 25 GW, valued at over ₹60,000 crore, Waaree has secured significant long-term revenue visibility.

Navigating International Trade Policies

A key concern for the sector has been the imposition of countervailing duties (CVD) by the United States. However, brokerages note that Waaree has effectively managed this risk. By sourcing solar cells from countries like Ethiopia, which attract lower tariffs of around 10%, the company bypasses the steep 126% CVD levied on certain Indian and Southeast Asian products. This diversified supply chain strategy protects its significant export orders, which constitute a large portion of its order book.

Premier Energies: A High-Growth Contender

Premier Energies is another key player receiving a 'Buy' rating, recognized for its rapid growth and technological adoption. Nuvama forecasts the company's Q4 revenue and EBITDA to grow by 29% and 13% year-on-year, respectively. This performance is driven by a 45% increase in module production and a 43% rise in cell production. The company is known for its focus on high-margin Domestic Content Requirement (DCR) modules and for being an early adopter of advanced n-type TOPCon cell technology.

Under its ambitious "Mission 2028," Premier Energies is executing a ₹12,500 crore capex plan to establish a fully integrated 10 GW solar manufacturing ecosystem, covering the entire value chain from wafers to modules. This strategic backward integration is expected to enhance efficiency and solidify its market position.

Vikram Solar and the Broader Market

Vikram Solar also remains a key player, with Nuvama projecting a 7% YoY revenue increase to ₹1,270 crore in Q4. The company is diversifying its portfolio by expanding into Battery Energy Storage Systems, with plans for a 1 GWh facility in Tamil Nadu. Brokerages like PL Capital have assigned an 86% upside potential to the stock, reflecting confidence in its growth trajectory.

The entire Indian solar sector is benefiting from a conducive policy environment. Government initiatives like the Production-Linked Incentive (PLI) scheme, PM Surya Ghar Muft Bijli Yojana, and PM-KUSUM are creating a robust manufacturing ecosystem and driving domestic demand. India's solar module manufacturing capacity nearly doubled in FY 2024-25, increasing from 38 GW to 74 GW, signaling the scale of the ongoing expansion.

Financial Performance Snapshot

Source: Company Filings. Figures converted from millions to crores.

Analyst Targets and Investment Outlook

Analysts remain overwhelmingly positive on the sector's prospects. Nuvama has issued multiple target prices for Waaree Energies, ranging from ₹3,737 to ₹4,150, implying an upside of 17-22%. Similarly, target prices for Premier Energies from various brokerages suggest an upside of 15-22%. The consensus reflects a belief that these companies are well-positioned to capitalize on the clean energy transition.

While the long-term outlook is bright, investors should remain mindful of near-term volatility. Margin fluctuations due to input costs and evolving global trade dynamics are key risks. However, the combination of strong order books, strategic expansion, and supportive government policies provides a solid foundation for sustained growth.

Conclusion

The Indian solar manufacturing industry is poised for significant, multi-decade growth. Market leaders like Waaree Energies and high-growth players like Premier Energies are executing well-defined strategies to scale capacity, diversify product offerings, and enhance vertical integration. While near-term margin pressures exist, the fundamental drivers of the sector remain exceptionally strong, justifying the bullish stance adopted by leading brokerage firms.