Premier Energies vs Waaree Energies: Who Will Lead the the Solar Revolution?
As the world gravitates towards cleaner and renewable energy, India has become a prominent player in the solar power sector. Standing fourth globally in solar power capacity, India is expected to add around 175 to 180 GW of solar capacity over fiscals 2025 to 2030. This provides a great chance for companies manufacturing solar cells and modules to make the most of this opportunity.
Premier Energies Ltd and Waaree Energies Ltd are two prominent players in the manufacture of solar modules, which can significantly benefit from the rising demand for solar power in the coming days. With the Indian government undertaking several solar energy promotion schemes, let’s see which companies are better positioned to make the most of the solar revolution.
Production capacity
Production capacity is one of the most critical factors determining as to who will race ahead in the solar game. While both Premier Energies and Waaree Energies are doing their best to meet the growing demand, Waaree Energies has an edge over Premier Energies in terms of production capacity.
As per their respective draft red herring prospectus filed with SEBI, Waaree Energies Ltd had an aggregate installed capacity of 12GW as of June 30, 2024. On the other hand, the aggregate annual installed capacity of Premier Energies as of March 31 2024 stood at 2GW for solar cells and 4.13 GW for solar modules.
Financial strength
Financials play a vital role in augmenting production capacity. Manufacturing solar cells and modules is capital-intensive, and funds play a vital role. While the total income of Premier Energies as of FY 24 stood at ₹3171.311 crores, the total income of Waaree Energies for FY 24 stood at ₹ 11632.763 crores. PAT margins of Premier Energies and Waaree Energies for FY 24 stood at 7.30% and 10.96%, respectively.
The numbers slightly tilt the scales in favour of Waaree Energies when it comes to finances to undertake various initiatives to augment production capacities and expansion plans.
Augmenting manufacturing capabilities through funds received via IPO
Waaree Energies Ltd and Premier Energies Ltd have raised funds through initial public offerings. One of the common goals of both companies is to deploy a part of the fresh issue to scale their manufacturing capabilities. Note that Waaree Energies has plans to use a portion of the fresh issue to part finance the cost of establishing the 6GW of ingot wafer, solar cell and solar PV module manufacturing facility in Odisha. On the other hand, Premier Energies has plans to deploy a certain portion of the fresh issue to invest in its subsidiary, Premier Energies Global Environment Private Limited, for part-financing the establishment of a 4 GW Solar PV TOPCon Cell and 4 GW Solar PV TOPCon module manufacturing facility in Hyderabad.
Augmentation in manufacturing capabilities positions both companies well to cater to the growing demand for solar cells and modules. Also, both companies have an equal number of manufacturing facilities — five.
Customer base
Along with manufacturing capabilities, it is equally essential to have a wide customer base to strengthen market positioning and capture opportunities. Premier Energies and Waaree Energies both boast a diversified customer base, domestically and globally.
While Premier Energies served 117 Indian customers and 3 overseas customers for the first three months ending June 30, 2024, Waaree Energies served 1067 customers in India and 12 global customers during the same period.
In conclusion
While both Premier Energies and Waaree Energies have rich experience, Waaree Energies seems to enjoy some competitive edge over Premier Energies due to its high production capacity, financial strength and wider customer base.
That said, Premier Energies can soon catch up with Waaree if it can successfully expand its overseas presence, increase exports in the US market, grow its rooftop solar offerings and upgrade its manufacturing capabilities by integrating the latest technology.
Source: Red Herring Prospectus
Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.
