Why D-Street optimism on Waaree Energies, Premier Energies needs a rethink

Waaree Energies stock popped 55 per cent on its Monday debut (October 28, 2024), taking its valuation multiple to 54 times. Premier Energies , another peer that listed two months ago, has more than doubled since then, stretching its P/E ratio to an astounding 190 times! The two are now the only publicly-listed solar module or solar panel manufacturers in India. The euphoric rally in these stocks is not without cause. The duo together caters to the majority of domestic solar panel demand. The two have been effectively capitalising on sectoral tailwinds, including growing local renewable energy needs, with an assist from government incentives. Their profit growth, as a result, has been on a tear in the last two years, leaping three to four times annually. Remarkable earning streak Company 2Y revenue growth (%) 2Y profit growth (%) 3Y Avg ROE (%) 3Y Avg ROCE (%) Premier Energies 105.7 443.2 11.9 11.7 Waaree Energies 99.8