Vikram Solar Stock Drops 10% on 85% Profit Decline
By Business Desk
Vikram Solar shares fell 10% after Q1 profit after tax plunged 85% YoY to Rs 20 crore, despite a 38% revenue increase. Explore the market reaction and analyst views.
Shares of Vikram Solar Ltd. plummeted 10% on Friday, reacting to the company’s Q1 results which revealed an 85% year-on-year (YoY) decline in profit after tax (PAT) to Rs 20 crore. This marked a significant drop from Rs 133 crore recorded in the same quarter last year.
Despite the substantial profit contraction, the company’s revenue from operations saw a 38% YoY increase, reaching Rs 1,563 crore compared to Rs 1,134 crore in the previous year. The Ebitda margin, however, sharply contracted to 8%, down from 21% in the year-ago quarter and 16% in the preceding March quarter.
Analyst Ratings and Performance Drivers
Following the results, UBS maintained a ‘Neutral’ rating on Vikram Solar’s stock, keeping its target price unchanged at Rs 215. JM Financial, conversely, suggested an ‘Add’ rating with a target price of Rs 219.
JM Financial highlighted that the company’s actual performance fell significantly short of their expectations and consensus estimates. They attributed this underperformance to declining non-DCR prices and a persistent demand-supply gap in cells, which is expected to hinder near-term performance improvement.
The firm indicated that the commissioning and stabilization of Vikram Solar’s cell-production facility, aimed at achieving optimal cell efficiency, would be a critical factor for its future trajectory. Vikram Solar’s shares touched a low of Rs 156.25 on the BSE, marking a 10.2% intraday decline.
Financials and Future Outlook
Over the past 12 months, the scrip has seen a 49.6% decline. The Bloomberg consensus target price, derived from seven analyst targets, stands at Rs 260, suggesting a potential upside of 55% from current levels.
Operating costs also rose, with employee costs increasing 56% YoY to Rs 55 crore. Other expenses surged 46% to Rs 114 crore. Depreciation was up 34% YoY, and financial costs jumped 53% to Rs 49 crore, contributing to the profit squeeze.
Vikram Solar plans to enhance its backward-integrated wafer and ingot manufacturing facility in Gangaikondan, Tamil Nadu. The facility’s capacity is slated to expand from 6 GW to 9 GW, with commissioning projected by FY29.