‘Sell Premier Energies, Waaree’ shares advises this analyst, with a downside of up to 41%

Brokerage firm Kotak Institutional Equities has initiated coverage on both renewable energy-oriented stocks – Waaree Energies Ltd. and Premier Energies Ltd. with a “sell” recommendation.

Kotak Institutional Equities has a price target of ₹2,550 for Waaree Energies, which implies a potential downside of 8% from Tuesday’s closing levels. However, the brokerage has a price target of ₹770 for shares of Premier Energies, which implies a potential downside of 41% from current levels.

For Premier Energies, Kotak said that it projects a 40%-plus downside due to elevated valuations although it expects the company to have a Compounded Annual Growth Rate (CAGR) of 44% between financial year 2024-2030.

The brokerage said that India’s solar sector is primed for growth with a Compounded Annual Growth Rate (CAGR) of 18% in utility scale solar capacity additions until financial year 2030.

Kotak Institutional Equities said that over the medium term, integrated Indian manufacturers (from ingot to module) and companies which have local US manufacturing presence, will continue to enjoy a competitive advantage over their peers, and therefore resulting in superior profitability.

The brokerage said that it has a “sell” rating on Waaree also due to elevated valuations and it expects a 35% earnings CAGR between financial year 2024-2030.

This is the first “sell” rating on Premier Energies along with JPMorgan, which has a “hold” recommendation on the stock. For Waaree, this is the first analyst coverage after listing.

Within a few months of listing, shares of Premier Energies have already gained nearly 190% from its IPO price of ₹450 per share. Shares of Waaree too, have nearly doubled from their issue price of ₹1,503 per share.