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Indosolar Ltd is in the business of manufacturing poly-crystalline solar photo-voltaic
(SPV) cells from silicon wafers utilizing crystalline silicon SPV cell technology for
converting sunlight directly into electricity through a process known as the “photovoltaic
effect”. Indosolar Ltd markets and sells products primarily to module
manufacturers on a business-to-business platform, who in turn supply to the system
integrators who installs the systems for grid and off-grid (roof top) applications for use
in the domestic market as well as markets in Europe, Spain, Japan, Asia, Canada
and USA.
Positive global and domestic Solar power demand Scenario: There has been a robust demand for the renewable
energy on account of the serious global warming issues faced by countries like Spain, Germany, South Korea, Italy and
United States which has resulted in spectacular growth in demand for crystalline silicon cells and thin film PV cells. On
account of the robust demand, consolidated production of crystalline silicon cells and thin film PV cells in 2009 has gone up
to 7.30 GW, 5 times from its level in 2005.
The domestic solar power generation market has been preceded by a favourable
policy regime. In order to promote the growth of solar power industry in India, the Jawaharlal Nehru National Solar Mission
was approved on November 19, 2009 which intends to establish India as a global leader in Solar power and has set up a
target to increase the solar power capacity to 22000 Mw by 2022, which in turn will generate robust demand for the PV cells.
Recent tie-up with GCL-Poly to ensure assured supply of raw material: Indo solar recently entered in to a deal for
procuring high quality wafers from GCL for an approximate value of ` 27 bn to the company from 2010-14. This will ensure
uninterrupted supply of silicon wafers for 4 years at a committed price which will help company to maintain high growth rate.
Strong order book provides decent revenue visibility: The Company has an order book of ` 10119 mn as of July 31,
2010 with eleven customers from seven countries for delivery of 170.36 MW of SPV cells. Of the above mentioned order
book, an order for 30.58 MW has already been executed aggregating to income of ` 1707.6 mn. The order book price of the
SPV cells ranges from 53.38 per watt to ` 69.17 per watt.
Valuations: At the CMP of ` 26, Indosolar trades at a P/E of 6.6x on FY12 EPS estimates of ` 3.9. On a EV/EBIDTA basis,
the stock is available at a multiple of 10.6 & 4.2 on FY11 & FY12 estimates. We recommend a “BUY” rating on the stock
with a long term view.
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