Stocks To Buy: Jefferies sees 73% upside in this renewable energy player

Shares of Emmvee Photovoltaic Power Ltd. rallied as much as 10% on Tuesday, January 6, after brokerage firm Jefferies initiated coverage on the stock with a 'Buy' rating and a price target of ₹320 per share.

The price target implies a potential upside of 73% from Monday's closing level.

Jefferies said India's solar installations are expected to grow at a 24% CAGR over FY25-28E, providing a strong structural tailwind for domestic manufacturers.

The brokerage mentioned that Emmvee's early entry into high efficiency TOPCon technology, superior DCR driven profitability and an adequately funded balance sheet as key competitive strengths.

Emmvee is only the second company in India to adopt TOPCon cells, with 3 GW of capacity operational since September 2024.

Jefferies also said that Emmvee has collaborated with Germany's Fraunhofer Institute for PV cell process equipment selection and optimisation. Its cell manufacturing line is sourced from Germany, with operating costs lower than comparable Chinese equipment.

While industry profitability is expected to normalise from FY28E onwards, Jefferies expects Emmvee to deliver high teens steady state return on capital employed over the medium term.

The company is in the process of expanding its cell and module capacity to 8.9 GW and 16.3 GW, respectively, by the end of FY27E.

The brokerage said strong cash flows from the DCR market, supported by elevated margins and a healthy balance sheet, should comfortably fund capacity expansion and backward integration.

Separately, Emmvee Photovoltaic has commenced operations at its 2.5 GW solar module line at its Unit VI facility in Sulibele, Bengaluru, as part of its planned capacity expansion.

With this commissioning, the company's aggregate solar module manufacturing capacity has increased to 10.3 GW.

Jefferies projects a 56% EBITDA CAGR over FY25-28E, driven by rising volumes, and values the stock at 9x forward EV to EBITDA.

The brokerage added that valuations remain attractive, with the stock trading at a 50% discount to peers.

Emmvee Photovoltaic Power shares were last trading 4.66% higher at ₹193.53. The stock is down 11% from its IPO price of ₹217.

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