'Good Companies but...' Bernstein explains why it is bearish on Premier and Waaree Energies

Shares of both Premier Energies Ltd. and Waaree Energies Ltd. are trading with losses of over 5% on Monday, January 5, after brokerage firm Bernstein reiterated its bearish stance on the stock despite calling them "good companies" in its latest note.

For Premier Energies, Bernstein cut its price target to ₹718 from ₹780 earlier, while for Waaree, it marginally raised its target to ₹2,109 from ₹2,087 earlier.

Bernstein believes that despite Premier and Waaree being good companies, they cannot be given higher multiples on peak margins in a market where a big supply wave is 12-18 months away.

"While our over-supply thesis is gradually seeing acceptance, we think the market is still missing the soft demand story," Bernstein wrote in its note, alluding to not only the recent reports surrounding overcapacity within the space, but also highlighting a potential lack of demand.

The brokerage expects solar additions to moderate and also the demand for domestic cells from utility scale players to come only from financial year 2028-2029, contrary to expectations from the middle of financial year 2027.

"We expect margin compression signs for these companies to be visible from Q3 FY26 results itself," Bernstein warned in its note.

12 analysts have coverage on Premier Energies, of which six of them have a "buy" rating, two say "hold", while four have a "sell" rating.

On the flip side, 13 analysts have coverage on Waaree, of which nine have a "buy" rating and the other four have a "sell" rating.

While Bernstein has warned of demand and supply concerns, Waaree Energies has announced that its subsidiary, Waaree Energy Storage Solutions, has completed a major funding round worth ₹1,003 crore from strategic investors, family offices and high networth individuals.

Shares of Waaree Energies are trading 5.4% lower on Monday at ₹2,712.4, while Premier Energies shares are now down 7% at ₹787.