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Sector Outlook – Policy Catalyst Expected to Drive Growth

Q1FY27 is a policy gap quarter. As of June 2026, PM KUSUM 2.0 has not been formally notified by MNRE. Based on discussions with various stakeholders, we expect PM-KUSUM 2.0 to be announced by the end of H1FY27E. The new scheme is expected to have higher execution targets as well as improved realisation. Material cost has stabilised at elevated levels, reducing margin at current realisation. We expect revenue visibility and margin expansion only after a full-fledged scheme announcement. Therefore, we maintain a “Neutral” stance till the announcement.

View and Valuation

Both, SKPI and OSWALPUM have appreciated and moved close to our TP. We believe that further upside can be triggered with a re-rating potential only after the scheme announcement. Revenue visibility and diversification are key monitorables for the sector. We, therefore, have revised our margin guidance downwards awaiting policy catalyst (read here: 90% probability) to account for higher material cost and lower realisation for the current order book. We, therefore, maintain our TP for SKPI and OSWALPUM and rate the stocks as “ADD” due to lower remaining upside.

PM KUSUM 2.0: Intent Confirmed, Notification Expected by H1FY27E

The policy signal is unambiguous. At the 4th National Agro-RE Summit in March 2026, Union Minister Pralhad Joshi announced PM KUSUM 2.0, which will include a dedicated 10-GW Agri-PV component allowing farming to continue beneath elevated solar panels.

ALMM List-II: A New Compliance Constraint

* ALMM List-1 mandated use of domestically manufactured solar modules for use in government-funded schemes. ALMM-2 goes a step ahead and includes DCR solar cells as a requirement for executing government scheme projects.

* From June 1, 2026, all modules must use DCR-compliant solar cells only to be eligible for subsidy.

* SKPI is building out a 2.20-GW greenfield solar DCR cell and module facility at Pithampur, Madhya Pradesh. The plant is expected to be operational by FY28E.

* OSWALPUM has 570 MW module capacity, but sources cells externally.

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