Buy Fujiyama Power Systems for the Target Rs 470 by Motilal Oswal Financial Services Ltd
ALMM compliance, rooftop solar tailwinds, and geographic expansion to fuel growth
* The implementation of the Approved List of Models and Manufacturers (ALMM) List-II has intensified India's structural shortage of domestically manufactured solar cells, with approved cell capacity (30GW) significantly lagging module capacity (174GW). UTLSOLAR is well-positioned to benefit through its captive 1GW Mono PERC (Passivated Emitter and Rear Cell) DCR cell facility, which ensures supply security, supports margins, and underpins the launch of its new 600W Mono PERC bifacial module (mitigating risk from TOPCon supply).
* Residential rooftop solar adoption under the PM Surya Ghar Muft Bijli Yojana (PMSGMBY) continues to accelerate, with over 4.5m installations and 7.5m applications, leaving a sizeable untapped opportunity of ~19GW (~5.4m households). Government-led initiatives, including digital outreach through the PMSGMBY platform, are expected to further improve consumer adoption, particularly in Tier-II and Tier-III markets. This expanding demand pipeline provides a strong growth runway for UTLSOLAR, supported by its integrated presence across the residential solar value chain.
* UTLSOLAR is strategically strengthening its presence across Assam, Karnataka, Telangana, and West Bengal, which collectively account for ~138GW of rooftop solar potential (22% of India's total) but currently contribute only ~6% of households covered under the PMSGMBY scheme. Rapid growth in household coverage, coupled with the Center's target of installing ~0.3m rooftop systems in West Bengal over the next two years, highlights the significant under-penetration and long-term growth opportunity in these markets.
* We expect UTLSOLAR to clock a CAGR of 49%/53%/53% in revenue/EBITDA/adj PAT during FY26-28. We reiterate our BUY rating with a TP of INR470 (based on 20x FY28E EPS).
Captive cell capacity positions UTLSOLAR to benefit from ALMM List-II
* India's solar manufacturing ecosystem is currently facing a structural imbalance between module capacity and domestic cell capacity, which has become more acute with the rollout of the ALMM List-II mandate effective 1 st Jun’26. Under this rule, all government-backed, net-metered, and openaccess solar projects must use panels built exclusively with domestically manufactured solar cells.
* India's approved module manufacturing capacity stands at ~174GW, while approved cell capacity is only ~30GW (~1/6th of module capacity). Domestic manufacturers produced ~11GW of DCR solar cells during Jan– Jun'26, implying ~76% capacity utilization. Assuming a similar run rate in 2HCY26, industry-wide DCR solar cell production is estimated at ~22GW for the full year.
* Even with aggressive capacity additions till CY28, domestic cell production is expected to support only ~55% of planned module capacity, with TOPCon remaining the tightest link because cell manufacturing is capital-intensive, technically complex, and takes 18–24 months to reach stable yields after commissioning
* To resolve the shortcomings of ALMM – II, UTLSOLAR commissioned a 1 GW Mono PERC DCR solar cell manufacturing plant at Dadri, Uttar Pradesh (INR3b investment), built specifically to produce Mono PERC DCR cells for 100% captive consumption by its own panel lines.
* In line with this internal cell capability, the company plans to scale sales of Mono PERC bifacial modules, anchored by the launch of a new 600W Mono PERC bifacial solar panel. This reflects a deliberate commercial strategy to route incremental client demand toward technologies backed by UTLSOLAR’s secured in-house DCR cell supply rather than TOPCon, which would require reliance on a constrained open market or premium-priced imports.
* Moreover, UTLSOLAR has announced an approved 1.2 GW TOPCon cell line at its Ratlam facility (expected to be set up by Jun’27), indicating that it is not overlooking the higher-efficiency TOPCon trend.
* Overall, UTLSOLAR is well-positioned to benefit from ALMM List-II through its captive DCR cell manufacturing, ensuring supply security and supporting margins amid domestic cell shortages. The planned TOPCon cell expansion further aligns the company with the industry's shift toward higher-efficiency technologies, strengthening its long-term growth prospects.
Valuation and view
* UTLSOLAR's growth is expected to be driven by three key levers: accelerating residential rooftop solar adoption under the PMSGMBY, strengthening backward integration through its captive 1GW DCR solar cell facility and planned 1.2GW TOPCon expansion, and channel expansion into high-potential states such as Assam, Karnataka, Telangana, and West Bengal (incremental opportunity of 638GW).
* Together, these initiatives provide the company with access to a sizeable untapped opportunity of ~19GW under PMSGMBY (till Mar’27), supporting sustained revenue growth, improved execution, and margin resilience over the medium term.
* We expect UTLSOLAR to clock a CAGR of 49%/53%/53% in revenue/EBITDA/adj PAT during FY26-28. We reiterate our BUY rating with a TP of INR470 (based on 20x FY28E EPS).
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