In a strategic move towards promoting solar energy adoption, Pradhan Mantri Suryodaya Yojana (PMSY) is set to create substantial opportunities for solar companies, with Tata Power, REC, IREDA, PFC, Havells India, KEI Industries, and APL Apollo emerging as the major beneficiaries, according to domestic brokerage Elara Securities.
The PMSY initiative, designed to target 1 crore households, is expected to significantly benefit manufacturers of solar panels, capital goods, structural steel pipes, and consumer durables and electrical companies. Elara Securities estimates the total opportunity size for solar panels at 10GW, with a total investment of Rs 55,400 crore.
The brokerage sees PMSY generating surplus income for rural households through the sale of surplus power to the grid after the investment pay-back period. For a 3kw installation, it estimates a potential income rise of 6.7% of the monthly average rural income.
Elara Securities identifies a funding opportunity of Rs 25,000 crore, primarily benefiting power finance companies. On the flip side, distribution utilities may see a hit of Rs 8,700 crore in revenue, as 4% of their sales are projected to transition to solar rooftop due to the installation of 10GW capacity.
The top picks by Elara Securities to benefit from PMSY are Tata Power, REC, PFC, KEI Industries, Havells India, and APL Apollo. The brokerage emphasizes the potential growth and positive impact on these stocks due to their alignment with the PMSY initiative.
Shares of the identified companies have witnessed varied movements in recent days, with REC showing a 12% increase, Tata Power up 4%, IREDA surging 39%, and PFC gaining 9%. Havells India shares dipped by 9%, while APL Apollo stocks experienced a 1% decline.
As the solar rooftop installation opportunity unfolds, Elara Securities anticipates companies like Tata Power, Sterling Wilson, Adani Enterprises, and Borosil Renewables to reap the benefits. The brokerage expects the scheme to generate demand for structural steel pipes, estimating 30,000 tonnes of demand.
