Shares of Fujiyama Power Systems Ltd (UTLSOLAR) experienced a significant rally, climbing as much as 6.2% during Friday's trading session to hit a day's high of Rs 303.85. This surge contributes to an impressive gain of nearly 53% for the stock across 16 trading sessions in April alone.
Brokerage Initiates 'Buy' Rating, Sets Target Price
Amidst this strong performance, Motilal Oswal Financial Services (MOFSL) has initiated coverage on Fujiyama Power Systems with a 'Buy' rating. The brokerage firm views the company as a key integrated business-to-consumer (B2C) player and solution provider within the burgeoning rooftop solar sector. MOFSL has set a target price of Rs 340 for the stock, valuing it at 15 times its projected FY28 earnings.
According to MOFSL, Fujiyama Power Systems is strategically expanding its capacity to capitalize on India's ambitious target of approximately 100 gigawatts (GW) in rooftop solar by fiscal year 2030.
Strategic Expansion and Competitive Edge
A significant factor noted by MOFSL is Fujiyama's recent commissioning of its 1GW in-house Domestic Content Requirement (DCR) solar cell plant in Dadri. This facility provides a substantial competitive advantage, enabling the company to meet growing solar demand and potentially boost gross margins to about 51% for DCR solar panels, reflecting a broader national push towards domestic solar manufacturing.
To further address soaring demand, Fujiyama Power Systems plans a substantial investment of Rs 300 crore into a new greenfield facility located in Ratlam. This expansion is set to significantly increase the company's total production capacity to 3.7 GW for solar panels, 3.7 GW for inverters, and 3.8 GWh for batteries.
Furthermore, the company is poised to benefit from India's transition from traditional tubular batteries to more efficient lithium-ion (Li-ion) batteries. Fujiyama plans to expand its Li-ion capacity dramatically, from 45 MWh to 2.5 GWh by the first quarter of fiscal year 2027, starting from fiscal year 2025.
Strong Growth Projections
Looking ahead, Motilal Oswal anticipates robust financial growth for Fujiyama Power Systems. The brokerage projects a stellar compound annual growth rate (CAGR) of 56% for revenue, 65% for EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and 65% for PAT (Profit After Tax) over the fiscal year 2025 to fiscal year 2028 period.