Can global market entry and BESS diversification drive long-term growth?
Overview: Vikram Solar’s growth story hinges on aggressive capacity expansion, backward integration, BESS diversification and entry into global markets, while executing massive investments and managing near-term industry overcapacity remain key monitoring targets.
Shares of this small company, which is primarily engaged in manufacturing solar PV modules and also provides EPC and O&M services, came into focus after seeing an upside of around 21.5% on the back of strong revenue visibility.
The market capitalization is Rs. Share: KRW 672.8 billion Vikram Solar Ltd It was trading at Rs. The price per share was 186 won, a 54.4% discount from the 52-week high of 100,000 won. 408 per share and has a P/E of 14.8, while the industry P/E is 22.9.
Brokerage Target: PL Capital has maintained a Buy rating on Vikram Solar with a target price of Rs. 226, reflecting confidence in the company’s long-term growth through expansion of production capacity, backward integration, BESS diversification, and entry into global markets. Let us now look at the key rationale and growth drivers behind this optimistic outlook.
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The brokerage maintains a positive long-term outlook on Vikram Solar based on strong growth visibility through capacity expansion, deep backward integration, diversification into BESS and planned global market entry. While near-term margins may remain under pressure due to industry overcapacity and plant stabilization, the broader investment thesis continues to hinge on the company’s ability to execute its capital expenditure pipeline and translate scale into sustainable profitability.
Domestic solar energy manufacturing demand outlook
The demand side of the Indian solar market continues to look healthy. Utility-scale solar capacity is expected to increase from ~106 GW in FY25 to ~181 GW by FY30E. The commercial and industrial sector is also expected to sustain 8-10 GW per year. Additionally, the rooftop segment is also expected to expand further in FY27 and FY28. Total annual module demand is expected to remain at ~75 GW DC. Therefore, the solar sector continues to see healthy structural demand growth.
However, the report also pointed out very clearly that there is a problem of overproduction in the short term. Under ALMM-I, the domestic registered module capacity already stands at 173 GW and is likely to further increase to over 200 GW by FY28. In addition, ALMM-II capacity additions are progressing at a very rapid pace. Therefore, there is a possibility of overproduction in the short term.
Increase capacity and reverse integration
One of the key areas discussed in the report is the company’s production capacity expansion roadmap. As of December 2025, the company’s approximately 9.5 GW module manufacturing capacity was operating at 88-89% capacity, indicating strong demand support. Additionally, the newly commissioned 5GW Vallam module facility is currently in an expansion phase to support the company’s growth.
The next major milestone is the 9GW cell manufacturing facility, which is progressing as planned. Civil engineering work will be completed in September 2026, and the installation and commissioning process will take place in October-November 2026. The initial expansion is scheduled to take place between December 2026 and March 2027, with the first cells scheduled to be manufactured in December 2026.
This is a significant expansion as the company is expected to achieve up to 70% backward integration through this facility, which will help the company expand its margins in the medium term.
In addition to the above, the company plans further expansion by adding 3 GW of cell capacity in FY28E and ~12 GW of wafer/ingot capacity in phases from FY29-30E. The company says its expansion strategy is on the right track, which is expected to help significantly improve the company’s profitability once operations stabilize.
Capex pipeline and financing
The total investment cost required for the planned 6 GW modules and 12 GW cell capacity is estimated at ~Rs. 6700 Crores will be funded through ~Rs. 3800 Crores debt and the rest through equity and IPO proceeds. The technology transition from machine imports to domestic equipment setup for the 9GW cell line also increased by about 10% compared to the original plan.
This high capital expenditure program is one of the key reasons why the report repeatedly emphasizes the importance of discipline in terms of execution and revenue visibility. This is because the company’s ability to leverage this investment for efficient earnings growth remains one of the key market monitors.
BESS expansion and diversification
Initial plans consist of 5 GWh BESS assembly, which will expand to ~7.5 GWh by FY29 and ~15 GWh in the next five years. Additionally, the segment is expected to add revenue streams other than solar modules and improve its margin mix.
Rescue industry opportunities are also discussed in the report. India’s BESS capacity is expected to increase from 27 GWh in FY26 to up to 321 GWh by FY35.
Order book and business mix
The current order size is approximately 10.6 GW, which is largely domestic in nature, according to the report. By sector, IPP projects account for ~55%, C&I ~21%, distribution ~13%, government projects ~6%, and EPC ~5%.
In terms of sectoral contribution, the report highlights that over the past 12 months, the contribution of the C&I sector has increased significantly from ~4% to ~21%, increasing the level of business diversification.
Cost optimization and operational efficiency
The company has made some operational improvements at its Vallam plant. For example, the company reduced its labor intensity from ~70 to ~40 using its own automated supply line, resulting in a conversion cost reduction of approximately 50% over 12 years. The new plant saw a 42% reduction in staffing requirements, 61% faster cycle times, and up to 80% reduction in defects.
Financial Outlook and Estimates
On the financial front, the report estimates a revenue/EBITDA/PAT CAGR of 65.1%/60.5%/19.7% for FY26-FY28E. However, EBITDA estimates for FY27 and FY28 were reduced by 4.9% and 7.0%, respectively, due to lower EBITDA per watt assumptions as cell manufacturing plants are expected to stabilize only by FY28.
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