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David among solar manufacturing Goliaths Initiate with BUY; TP of INR565

We initiate coverage on Saatvik Green Energy (SGEL) with a BUY rating and a TP of INR565. As of FY26 end, SGEL had an installed module manufacturing capacity of 4.8GW at its Ambala facility in Haryana. The company is expanding its module manufacturing capacity by an additional 4GW and is also entering cell manufacturing with a planned capacity of 6GW. Consequently, SGEL's module/cell manufacturing capacities are likely to reach 8.8GW/2.4GW by FY27 and 8.8GW/ 6GW by FY28. SGEL also plans to enter the ingot-wafer segment with a proposed capacity of 6GW by FY29, strengthening its backward integration strategy

Multi-decade opportunity in solar manufacturing

India is entering a significant power investment cycle, with an estimated opportunity of ~INR40t across the power value chain till FY32. This is driven by the country's target to expand installed power capacity to 900GW by FY32 (532GW at FY26-end), with solar expected to contribute ~40% of the capacity (vs. 28% currently). Solar growth has been led by the commercial & industrial (C&I), rooftop solar, and PM-KUSUM segments, which are expected to account for over 50% of annual solar additions from FY27 onward

Ambitious government vision supported by favorable policies

The government's RE ambitions are being complemented by supportive policies, such as Approved List of Module Manufacturers (ALMM), Approved List of Cell Manufacturers (ALCM), and Approved List of Wafer Manufacturers (ALWM), which are driving deeper backward integration in solar, significantly increasing capex intensity (~INR1.5b/GW to ~INR14b/GW). The substantial capital requirements and execution challenges associated with backward integration are likely to keep supply-side constraints intact through FY30 and beyond.

Scale and backward integration to fuel 55% EBITDA CAGR over FY26-28

We estimate a revenue/EBITDA/APAT CAGR of 38%/55%/44% over FY26-28, as SGEL’s plans to expand its module and cell manufacturing facilities come to fruition. With new capacities coming online, we forecast module sales of 3.8GW/4.9GW in FY27/FY28 (vs. 3.1GW in FY26). Additionally, as domestic content requirement (DCR) modules are expected to represent ~56% of FY28 sales, realizations should rise. We build in capex of INR15b/INR16b in FY27/ FY28 for the expansion of 4GW/6GW of module/cell manufacturing capacities, with the net debt-to-equity ratio rising from 0.6x in FY26 to 1.3x (remaining within management's target range of 1.0–1.5x).

EBITDA margin stability underpinned by higher-margin DCR segment

With 2.4GW of cell facility expected to be commissioned in 2HFY27, SGEL is wellpositioned to enter the more lucrative DCR-compliant module market, which offers better realizations and higher margins. We expect EBITDA margins to remain at 10% in FY27 amid industry overcapacity and high input costs, though they should improve to 15% in FY28 as cell operations stabilize and backward integration benefits accrue. Meanwhile, smaller module players without cell capacities are likely to face weak margins, providing SGEL with a competitive edge.

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