Premier Energies shares decline after Avendus Spark says stock is 'fairly priced'

Shares of Premier Energies Ltd. declined on Tuesday, September 23, even as brokerage firm Avendus Spark initiated coverage on the stock, projecting a 7% upside from its previous close.

The brokerage initiated coverage on the stock with an "add" rating and a price target of ₹1,100 per share.

Avendus Spark said Premier Energies is a leading integrated solar module manufacturer and it is fairly priced.

The brokerage remains optimistic on the stock led by favourable macro factors, domestic policy push, and demand-supply mismatch, as well as the company's position as the Number 3 integrated manufacturer in India.

Premier Energies could see sustained gross margins and robust EBITDA margins due to higher-than-industry utilisation, aided by its high capacity growth, Avendus Spark wrote in its note.

The company is likely to report a Compounded Annual Growth Rate (CAGR) of 30% for its Profit After Tax (PAT) over financial year 2025-2028, with a strong return on capital employed (ROCE) of 32%, according to the Avendus Spark note.

However, as the company is a fixed-cost heavy business, profitability could also be affected by lower utilisation and realisation, the brokerage said, adding that the stock is "fairly priced", and therefore the limited upside potential.

Of the seven analysts that have coverage on the stock, three have a "buy" rating and two have sell "hold" and "sell" ratings.

Shares of Premier Energies were down 1.3% at ₹1,014 apiece around 11.10 am on Tuesday. The stock has gained 10% in the last six months but has declined 23.9% this year, so far.

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