Solar energy stocks gained traction in another session on Wednesday, with Borosil Renewables jumping 12% and hitting a fresh 52-week high. The government’s Pradhanmantri Suryodaya Yojana (PSY) announced on January 22 has lent a fresh impetus to the sector with panel manufacturing companies seen to be the biggest beneficiaries, according to estimates by JM Financial.
JM has picked Waree Renewable Technologies, Insolation Energy and Premier Energy and Infrastructure as its top bet in the segment along with eight other stocks from allied industries. Shares of Waree Renewable Technologies soared 5% and hit its 52-week high of Rs 3159.20 on the BSE.

Others, including state-run Indian Renewable Energy Development Agency (IREDA), Surana Solar and Sterling and Wilson Renewable Energy also gained nearly 5% and hit fresh 52-week highs. Tata Power was also up by over 3% while Gensol Engineering emerged as the sole loser around 1 pm.

Giving a break-up of the cost, JM Financial said that a typical rooftop solar panel requires a solar panel which accounts for 30-35% of the total cost, followed by a solar inverter (10-15%), cables (8-12%), metering and coordination with power distribution authorities and transportation/fabrications and other incidental labour charges. A standard 3kWh capacity solar rooftop could be set up at an estimated cost of Rs 1.5-2.1 lakh, JM opined.

The brokerage also identified V-Guard and Havells in the inverter segment; Polycab India, RR Kabel, Finolex and V-Guard in wires and HPL Electric & Power and Genus Power in the metering segment as key beneficiaries.

“While it (Government) had launched a rooftop Solar Programme in 2014 with a target solar installation of 40GW by FY22, it could achieve only 11GW by FY22 due to several constraints including high dependence on imports and inadequate awareness among households. With increased domestic manufacturing and fresh impetus from GoI, we believe the scenario appears promising for Solar Panel manufacturing companies and electricals companies over the next 3 years,” a JM Financial report said.

Solar-based power generation capacity has seen a substantial increase in FY14-23 from 3GW to 73GW in FY23 and it now accounts for 17% of total power generation capacity, the brokerage note said.However, over 78% of total solar capacity addition happened on ground solar parks while the rooftop segment accounts for just 15% dragged by limited success.

The high cost of solar panels and solar modules has resulted in a longer payback period. Moreover, operational issues linked to connection and inadequate awareness also created a strong deterrence.

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In JM’s view, these solar panel companies could see potential incremental revenue up to Rs 15,000 over the next 3 years from the rooftop solar segment for households.

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