JM Financial downgraded Vikram Solar to ‘Reduce’ from ‘Add’ primarily due to several contracting margins and operational pressures reported in the Q4 FY26 results. Also, the brokerage has slashed the target price to Rs 195 from Rs 202, implying a downside of 9.3%.
Significant margin compression
The primary driver for the downgrade was margin compression, with EBITDA margins falling to 16.1% in Q4 FY26. This was a notable decline from the 18.7% recorded in the same period the previous year and missed the consensus estimate of 18.7%.
Declining profitability per watt
The company’s EBITDA per watt moderated to Rs 2.35 in Q4 FY26, down from Rs 2.57 in the previous quarter. Its management cautioned that this metric is expected to contract even more in the near term, guiding for a range of Rs 1.7–2.
Rising raw material and input costs
Margins were pressured by price increases for EVA sheets (linked to crude oil prices) and aluminium frames. Additionally, cell prices rose due to the withdrawal of export rebates by China and increasing silver prices.
Reduction in order book visibility
The order book declined by 23% quarter-on-quarter, falling to 8.2GW. This was largely due to the exclusion of 1.5GW of orders currently under renegotiation and a shift in the distribution segment toward spot buying rather than recurring contracts.
“Further, 1GW of distribution order book has been excluded as the company moves to DCR modules, which involves spot buying by the distributor as opposed to recurring contracts in the case of the NDCR segment,” said JM Financial.
Downward Revision of earnings estimates
Following the quarterly performance, JM Financial significantly cut its financial forecasts. Specifically, the net profit estimate for FY28 was reduced by 18.57%.
However, Vikram Solar plans to expand its module manufacturing capacity to 15.5GW in
FY27 from its current capacity of 9.5GW and set up 9GW cell manufacturing capacity by December 2026. “It is aiming for a fully integrated ecosystem by setting up 12GW wafer-ingot capacity by FY29–30 and also diversifying into BESS with 7.5/15 GWh target capacity by FY29 and FY30,” said JM Financial.
Vikram Solar share price performance
The share price of Vikram Solar has fallen 6% in the last five trading sessions. The stock has dived 34% in the last six months and erased 42% of investors’ wealth over the previous 12 months.
