‘Too Cheap to Ignore’: Jefferies Initiates Coverage on Emmvee Photovoltaic, Sees 70% Uplift

Indian solar manufacturing is entering a phase of rapid scale-up, and Jefferies believes select domestic players are well placed to benefit from this transition. In a new report, the global brokerage initiated coverage on Emmvee Photovoltaic Power with a buy rating and target price of Rs 320, up 70% from current levels, citing strong growth visibility, policy support and attractive valuations.Jefferies expects annual solar installations in India to grow at a CAGR of 24% between FY25 and FY28, driven by falling solar rates, rising energy demand and increasing adoption of battery energy storage systems.

According to the brokerage, solar rates have consistently remained below the cost of new thermal energy over the past four years, making solar the preferred choice for utilities and industrial users.The recent discovery of solar plus storage tariffs in the range of Rs 3-3.5 per unit has further strengthened the case for renewables. Jefferies notes that these rates imply battery storage costs of Rs 4.5-5 per unit, which still compares favorably with the marginal thermal energy rates of Rs 5.4-5.8 per unit. Importantly, solar plus storage contracts lock in prices for 25 years, unlike thermal energy where costs increase annually.

Against this backdrop, Jefferies sees solar emerging as the dominant renewable energy source in India. It estimates that annual solar installations will increase from about 34 GW in FY25 to 65 GW in FY28.

Policy support remains a key driver for domestic manufacturers. Government regulations such as the Approved List of Models and Manufacturers (ALMM) and domestic content requirements for public sector projects have effectively reserved a large share of the market for Indian manufacturers.

This has led to a shortage of domestic solar cells, driving up module prices and improving profitability for local players. Jefferies expects that similar policy protections will eventually extend to upstream segments such as blocks and wafers. According to the broker, Emmvee stands out for its early transition to highly efficient TOPCon cell technology. The company is among the first in India to operationalize large-scale TOPCon cell capacity, with a capacity of 3 GW as of September 2024. The partnership with Germany’s Fraunhofer Institute and the use of German-sourced equipment is expected to keep operating costs competitive.

The company is also expanding aggressively. Jefferies estimates that Emmvee’s cell and module capacity will increase to 8.9 GW and 16.3 GW, respectively, by FY27. Unlike some peers, Emmvee remains focused on the core solar value chain and has no plans to diversify into batteries or inverters.

While Jefferies acknowledges that domestic oversupply could put pressure on margins in the medium term, the company expects industry profitability to stabilize in fiscal 2028 as inefficient capacities are retired and stricter efficiency standards come into effect. Even after normalization, Emmvee is expected to deliver high returns on capital.

On the numbers front, Jefferies forecasts an EBITDA CAGR of 56% between FY25 and FY28, supported by rising volumes despite some margin compression. At current levels, the stock trades at about a 50% discount to peers, prompting Jefferies to value Emmvee at 9x forward EV/EBITDA.

Risks include weaker-than-expected domestic solar demand and the possibility of all announced capacities becoming operational, according to the brokerage.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of Economic Times)