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Waaree Energies vs Premier Energies: Who dominates the Indian solar energy sector?
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7 min read | Updated on November 21, 2024, 13:31 IST
SUMMARY
The solar industry in India is on a growth path, propelled by renewable energy solutions. Recently listed two key players in this sector, Waaree Energies and Premier Energies, are well-placed to capture the potential growth of the sector. Historically, Waaree has shown 41.69% revenue growth, while Premier Energies has shown a CAGR of 27.12%.
Stock list
The electricity was transmitted to Bangladesh via the Indian transmission line at around 1 pm local time
India’s solar industry is positioned for sustained growth, fueled by solar energy equipment production, supportive policies, and a rising demand for clean energy solutions. India is targeting to become a global energy leader by 2070, with 50% of its electricity from renewables by 2030. Government plans include 500 GW of clean energy by 2030, with 300 GW from solar. These changes attract major investment inflows in energy sectors.
Total FDI equity inflows in India's non-conventional energy sector during Q1 FY25 stood at $1.04 billion, up about 35% annually.
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. Here is a detailed comparison of Waaree Energies and Premier Energies.
Company background
| Company Name | Current Price (in ₹) | Market Capitalisation (in ₹ crore) | Returns Since Listing | Return on Equity (FY 2024) | Return on Capital Employed (FY2024) |
|---|---|---|---|---|---|
| Waaree Energies | 3,128 | 89,863 | 33.6% (Oct 28) | 33.4% | 43.6% |
| Premier Energies | 1,059 | 47,773 | 26.4% (Sep 04) | 43.7% | 25.2% |
Capacity and market share
Waaree Energies is India’s largest manufacturer and exporter of solar modules. As of FY24, it holds a 21% share of the domestic market for solar modules and a 44% share in India's solar module exports. Its installed capacity surged from 2GW in FY21 to 13.3GW by FY24.
Premier Energies is India’s second-largest integrated solar cell and solar module manufacturer and India’s second-largest solar cell manufacturer. As of FY24, it has an aggregate annual installed capacity of 2 GW and a 25% market share and it is the 4th largest manufacturer of solar models with an annual installed capacity of 4.13 GW
Top Line - Revenue growth
In the last five years, Waaree Energies has shown a 41.69% compounded annual growth rate (CAGR), while Premier Energies has seen a rising 27.12% CAGR.
| Company | Years | Mar-20 | Mar-21 | Mar-22 | Mar-23 | Mar-24 |
|---|---|---|---|---|---|---|
| Waaree Energies | Revenue | ₹1,995.8 | ₹1,952.8 | ₹2,854.3 | ₹6,750.9 | ₹11,397.6 |
| Revenue Growth | -2.15% | 46.16% | 136.52% | 68.83% | ||
| Premier Energies | Revenue | ₹947.2 | ₹701.5 | ₹742.9 | ₹1,428.5 | ₹3,143.8 |
| Revenue Growth | -25.94% | 5.90% | 92.30% | 120.07% |
Premier Energies' revenues were driven by increasing its steel plant capacity and diversifying into EPC and O&M services, whereas Waaree Energies' revenue rose due to capacity expansion, product diversification, and international sales aided by government support.
Bottom line and margins
Waaree Energies saw a dip into minor losses in 2022, currently standing at all-time high profits, while Premier Energies saw a turnaround in 2024 after bearing losses for the last 3 financial years as shown in the table below.
| Company | Years | Mar-20 | Mar-21 | Mar-22 | Mar-23 | Mar-24 |
|---|---|---|---|---|---|---|
| Waaree Energies | EBITDA | 92.77 | 84.85 | 105.95 | 835.81 | 1574.81 |
| EBITDA Margins | 4.65% | 4.35% | 3.71% | 12.38% | 13.82% | |
| Net Profit | 14.01 | 2.86 | -16.92 | 412.53 | 698.27 | |
| Net Margins | 0.70% | 0.15% | -0.59% | 6.11% | 6.13% | |
| Net Profit Growth | -79.59% | -691.61% | 2338.12% | 69.27% | ||
| Premier Energies | EBITDA | 94.07 | 53.69 | 29.57 | 78.2 | 477.86 |
| EBITDA Margins | 9.93% | 7.65% | 3.98% | 5.47% | 15.20% | |
| EBITDA Growth | -42.93% | -44.92% | 164.46% | 511.07% | ||
| Net Profit | 26.74 | -9.63 | -39.74 | -49.24 | 202.58 | |
| Net Margins | 2.82% | -1.37% | -5.35% | -3.45% | 6.44% | |
| Net Profit Growth | -136.01% | 312.67% | 23.91% | 511.41% |
Waaree Energies has seen improvement in its EBITDA margin. This growth suggests that the company has effectively managed its costs and improved its operational efficiencies, particularly in 2023. The consistent upward trend in profits in Waaree Energies was likely fueled by increased production capacity and market demand.
On the other hand, Premier Energies experienced a decline in its EBITDA margin from 9.93% in 2020 to 3.98% in 2023, before rebounding to 15.20% in 2024. However, it has been consistently rising since 2022.
Expansion plans
Waaree Energies is expanding to meet rising demand, both in India and the US. The company plans to set up a 1.6 GW solar PV module manufacturing facility in Houston, Texas, with potential expansion to 3 GW by FY26 and 5 GW by FY27.
In India, Waaree leads in utility and enterprise module sales, with 12 GW of installed capacity, including a new 1.3 GW facility at its Indosolar plant. It is also developing a fully integrated 6 GW plant for ingots, wafers, solar cells, and modules, targeting FY27. This US expansion aligns with the Inflation Reduction Act’s clean energy incentives.
Premier Energies is scaling up in solar with significant growth plans. By FY25, it aims to add a 1,000 MW TOPCon solar cell line at its Unit II, funded by ₹66.94 crore from IREDA, complementing its current 2 GW cell and 4.13 GW module capacities.
The company also plans a new facility for 4 GW TOPCon cell and module production, partially financed by a fresh share issue. To cut costs and improve supply stability, Premier Energies will produce ingots and wafers in-house. Additionally, it is transitioning to monocrystalline cells, automating production, and sourcing equipment from Europe for stronger integration.
Valuations
The most common and effective ratio for comparative analysis and valuation is the price-to-earnings (PE) ratio. The PE ratio tells us how much shareholders are paying for one rupee of earnings.
- The PE for Waaree Energies is at 90.2x
- For Premier Energies, the PE stood at 204x
- The industry PE is at 61.2x, which means both companies trade above the industry average.
Waaree Energies has experienced a revenue growth of 41.69% throughout 2020-2024 capitalising on government support and global outreach with a low debt debt with a high ROCE of 43.6% and ROE of 33.4%. Premier Energies, on the other hand, has a 5-year CAGR of 27.12% but faces challenges in the margins and has higher financial leverage based on aggressive expansion. However, a positive change is that the company has a highly improved ROE of 43.7% in FY2024 with an ROCE of 25.2%. Both capital-intensive companies are ready to seize any available opportunity in the solar sector.
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