India’s solar energy sector is poised for a breakout phase, driven by robust policy support, rising demand for clean energy, and aggressive capacity expansion targets. According to a recent report by Nuvama Institutional Equities, solar stocks are set to benefit significantly from these tailwinds, with Waaree Energies emerging as the brokerage’s top pick in the segment. The report highlights that the government’s push for domestic manufacturing, favorable import duties, and ambitious renewable energy targets are creating a fertile ground for solar companies to thrive.
The brokerage expects solar stocks to outperform broader indices over the next 12–18 months, citing strong earnings visibility, margin expansion, and structural demand growth. Waaree Energies, which recently filed its draft red herring prospectus (DRHP) for an IPO, is seen as a key beneficiary of India’s solar manufacturing boom.
☀️ Policy Tailwinds Powering Solar Sector Momentum
India’s renewable energy roadmap aims to achieve 500 GW of non-fossil fuel capacity by 2030, with solar expected to contribute over 280 GW. The Production Linked Incentive (PLI) scheme for solar module manufacturing, customs duty on imported modules, and the Green Hydrogen Mission are among the key policy levers driving sectoral growth.
| Policy Initiative | Impact on Solar Sector |
|---|---|
| PLI Scheme for Solar Modules | Boosts domestic manufacturing |
| 40% Basic Customs Duty (BCD) | Protects Indian manufacturers |
| Green Hydrogen Mission | Drives demand for solar-powered electrolysis |
| Solar Park Development | Eases land acquisition and grid integration |
| Net Metering Reforms | Encourages rooftop solar adoption |
Nuvama’s report notes that the policy environment is “structurally supportive” and likely to remain favorable through the current government’s tenure.
📈 Waaree Energies: Nuvama’s Top Pick
Waaree Energies, one of India’s largest solar module manufacturers, has been identified as the top pick in the solar space by Nuvama. The company has a manufacturing capacity of 12 GW and plans to expand to 20 GW by FY27. Its backward integration strategy, strong order book, and export potential make it a compelling investment, according to the brokerage.
| Company Name | Manufacturing Capacity | FY27 Target | Key Strengths |
|---|---|---|---|
| Waaree Energies | 12 GW | 20 GW | Backward integration, export-ready |
| Vikram Solar | 3.5 GW | 5 GW | Domestic EPC focus |
| Adani Solar | 4 GW | 10 GW | Group synergies, captive demand |
| Tata Power Solar | 2.5 GW | 4 GW | Rooftop and utility-scale projects |
Waaree’s IPO is expected to raise ₹2,500 crore, with proceeds earmarked for capacity expansion, R&D, and working capital. The company’s strong financials and operational scale position it as a leader in India’s solar manufacturing ecosystem.
🧠 Sectoral Outlook: Earnings Visibility and Margin Expansion
Nuvama expects solar companies to report strong earnings growth over the next two years, driven by higher module prices, improved utilization rates, and operating leverage. The brokerage forecasts 18–22% CAGR in revenue for leading solar manufacturers and 150–200 bps margin expansion due to economies of scale and backward integration.
| Metric | FY25 Estimate | FY26 Forecast | Growth Driver |
|---|---|---|---|
| Revenue CAGR | 18–22% | 20–24% | Capacity expansion, exports |
| EBITDA Margin | 12.5% | 14.5% | Operating leverage |
| ROCE | 16% | 18% | Asset optimization |
| Order Book Growth | ₹9,000 crore | ₹12,000 crore | Utility-scale project demand |
The report also highlights rising export opportunities, especially to the U.S. and Europe, where anti-China sentiment is prompting buyers to diversify sourcing.
🔍 Risks and Challenges
Despite the bullish outlook, Nuvama cautions investors about certain risks, including:
- Volatility in polysilicon prices
- Delays in PLI disbursement
- Grid connectivity bottlenecks
- Regulatory uncertainty in net metering
| Risk Factor | Impact Level | Mitigation Strategy |
|---|---|---|
| Polysilicon Price Volatility | Moderate | Long-term supply contracts |
| PLI Disbursement Delays | High | Government engagement |
| Grid Connectivity Issues | Moderate | Solar park partnerships |
| Net Metering Policy Changes | Low | Rooftop diversification |
Nuvama advises investors to focus on companies with diversified revenue streams, strong execution track records, and policy alignment.
🌍 Global Context: India’s Position in Solar Supply Chain
India is emerging as a credible alternative to China in the global solar supply chain. With over 30 GW of module capacity expected by FY27 and rising exports to the U.S., Middle East, and Africa, Indian manufacturers are gaining traction.
| Country | Module Manufacturing Capacity | Export Focus |
|---|---|---|
| China | 350 GW | Global dominance |
| India | 12 GW (FY25) | U.S., EU, Africa |
| Vietnam | 8 GW | U.S., EU |
| Malaysia | 6 GW | U.S., Japan |
India’s solar exports grew 42% YoY in FY25, driven by demand from the U.S. and Europe amid trade restrictions on Chinese modules.
🧠 Expert Commentary
Energy analysts have echoed Nuvama’s optimism. Rituparna Das, a renewable energy consultant, said:
“India’s solar sector is entering a golden phase. With policy support and manufacturing scale, companies like Waaree are well-positioned to lead the next wave of clean energy growth.”
Market strategist Ajay Bodke added:
“Solar stocks offer structural growth, not just cyclical upside. Investors should look beyond short-term volatility and focus on long-term fundamentals.”
📌 Conclusion
Solar stocks are set to shine brighter than ever, powered by policy tailwinds, rising global demand, and domestic manufacturing momentum. Nuvama’s bullish stance on Waaree Energies reflects growing investor confidence in India’s clean energy transition. As the country races toward its 2030 renewable energy goals, solar companies with scale, strategy, and execution strength are likely to deliver outsized returns.
For investors seeking exposure to India’s green energy future, the solar sector offers a compelling opportunity—one that’s backed not just by market dynamics, but by national ambition.
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Disclaimer: This article is based on publicly available brokerage reports and energy sector updates as of August 21, 2025. It is intended for informational purposes only and does not constitute investment advice.
