Broker’s call: Emmvee Photovoltaic (Buy)

The brokerage firm has initiated coverage on Emmvee Photovoltaic Power Ltd (EMMVEE) with a positive 'Buy' rating. The target price set for the company is ₹395, which is based on valuing the firm at 7.5x its 4-quarter ending Sep-28 EEBITDA. EMMVEE is considered one of India's leading integrated solar PV module and cell manufacturers, boasting 10.30 GW of module capacity and 2.94 GW of cell capacity.

The company has plans for further capex and backward integration. It is among the pioneers of high-efficiency TOPCon technology in India, addressing the market's shortage of TOPCon capacity. The firm trades on ALMM List I and List II, allowing it to supply to projects with DCR mandate. Its substantial order book and improved margins are attributed to being a larger player in a fragmented market and an early adopter of technology and backward integration.

These factors have benefited the company from industry tailwinds. The strong order book and better margins are expected to continue, as India prioritizes its renewable energy targets. Currently, EMMVEE is trading at 6.2x 1-year forward EV/EBITDA, and its FY28E EBITDA multiple is at 5.7x, which is 6% below the industry average of 6x and a significant 28-41% discount to Waaree and Premier's respective multiples.

With strong growth expectations and additional benefits from backward integration, the brokerage firm values the company at a 7.5x EV/EBITDA multiple based on 4-quarter ending Sep-28 EEBITDA, resulting in a target price of ₹395.