Buy Premier Energies Ltd for the Target Rs 1,288 by Prabhudas Liladhar Ltd
Growth on Track with Margins Under Watch
Premier Energies reported a healthy Q2FY27 performance, with consolidated revenue growing 43.3% YoY, supported by higher utilization in cell and capacity ramp-up. EBITDA margin contracted 260bps YoY to 28%, reflecting a change in business mix.. Around 25-30% of the order book comprises non-DCR orders, which carry relatively lower margins. The 7GW TOPCon cell line at Naidupeta is undergoing commissioning and trial runs, with management expecting CUF to reach 25-30% in Dec’26 and ~70% by Mar’27. This ramp-up, along with higher volumes from the expanded Seetharampur module facility, is expected to drive a meaningful increase in output over the coming quarters. Management expects inventory levels to normalize as new capacities ramp up, with FY27 capex estimated at ~INR24bn
The Transcon business reported revenue of INR1.2bn and EBITDA margin of 15%, broadly in line with management’s normalized margin expectation of ~15%. The business is scaling up its transformer capacity, with management targeting 80-90% capacity utilisation over the next three years and expecting revenue to more than triple over the same period. Overall, the near-term performance will be driven by the execution and ramp-up of new solar manufacturing capacities, while margin trajectory, non-DCR order mix and working-capital intensity remain key monitorable.
We estimate revenue/EBITDA/PAT CAGR of 40.3%/30.3%/17.7% over FY26-27E. We tweak our FY27E/FY28E earnings estimates with a revised TP of INR1,288 (earlier INR1,361), based on 11.5x Sep’28E EV/EBITDA with an implying PE of 21x Sep’28E. Maintain ‘BUY’
Q2FY27 financial performance: Revenue grew by 43.3% YoY to INR26.3bn (PLe: INR24.9bn). EBITDA increased by 31.2% YoY to INR7.3bn (PLe: INR6.6bn). EBITDA margin contracted by 258bps YoY to 28.0% (PLe: 26.8%). PAT grew by 29.6% YoY to INR4.6bn (PLe: INR4.2bn). Module/Cell revenue grew by ~53.2%/~7.5% YoY to INR20.2bn/INR4.7bn (77%/18% of total revenue), respectively while revenue contribution from Transcon stood at INR 1.0bn (4% of total revenue). Domestic revenue grew by 41.8% YoY to INR25.7bn. Module production stood at 1,119MW vs 953MW in Q1FY27. Order book as of Sep’26 stood at INR166bn (10.7GW), with Module/Cell/Transformer mix of 48%/48%/2%, while order inflow in Q2FY27 stood at INR 42.2bn. Net debt increased to INR19.1bn vs INR16.4bn as on Q1FY27.
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SEBI Registration number is INH000000933
