Australian Premium Solar (APS): Strong Financial Performance and Strategic Growth in the Indian Solar Sector_ Stock study

 1. Company History

Australian Premium Solar (India) Limited was established in 2013 as an indigenous solar solutions provider.

Key Milestones:

• 2013: Incorporated as a private limited company.
• 2015: Started setting up a 5MW module production line in Kathwada, Ahmedabad, Gujarat.
• 2016: Started trading activities and received Salt-Mist & Ammonia corrosion IEC certification.
• 2017: Increased Ahmedabad production line capacity to 50 MW.
• 2018: Acquired 16,000 sq. mt. premises at Majra, Tajpur, Gujarat, to set up a new production line, and started its retail division for residential rooftop solutions in Gujarat.
• 2019: Became Gujarat’s most trusted and preferred residential rooftop Solar Company.
• 2021: Received environmental testing IEC Certification.
• 2022: Registered in the "approved list of Modules & manufacturers" published by the Government of India.
• 2023: Expanded production capacity to 200 MW at the Majra unit and added "APS Solar water Pump" to its product range.
• 2024: Listed on NSE and converted from a Private Limited to a Public Limited Company.

2. Current Manufacturing Capacities

• Current Manufacturing Capacity: APS has a 600 MW+ annual manufacturing capacity. This includes a 400 MW Monoperc line, with a 200 MW poly line recently isolated.
• Utilization: The 400 MW Monoperc line is currently being utilized at 80% to 85%. For the 9M FY25 period, the overall utilization capacity was stated as 40-50% annually, but recent updates indicate 70-80% utilization for the existing 600MW facility. The company aims to run a third shift to increase utilization.
• Location: The manufacturing unit is located at Tajpur, Gujarat, spanning 16,500 Sq.ft with new Hi-Tech machinery.

3. Ongoing Capacity Expansion

APS is undertaking significant expansion in both solar module and solar cell manufacturing.

• Solar Module Manufacturing Expansion (TOPCon):
• New Facility: A total facility spanning 26,000 sq. meters (including new acquisitions and leases) will be dedicated to TOPCon solar panels.
• Capacity Addition: An additional 800 MW capacity is being added.
• Phased Rollout:
• Phase 1 (400 MW): Machinery has been procured. Equipment is scheduled to arrive in India by the end of August 2025, with installation and commissioning completed by end of September 2025. Commercial production is targeted to commence in the first week of October 2025. This will bring the total solar module manufacturing capacity to 1 GW (400 MW existing Monoperc + 400 MW new TOPCon), with the 200 MW poly line being isolated.
• Phase 2 (Remaining 400 MW): This phase is expected to be operational approximately 9-12 months later (by Q1 FY26-27 or April 2026).
• Cost: For the first 400 MW phase, machinery would be about $4 million (approx. INR 30-35 crore), with the total CAPEX for 800 MW (including building, utility, and working capital) being around INR 85-90 crore.
• Strategic Expansion into Solar Cell Manufacturing:
• Planned Facility: APS announced expansion into solar cell manufacturing with a planned 4 GW TOPCon solar cell facility in Ahmedabad, Gujarat.
• Vertical Integration: This initiative is a crucial step towards complete vertical integration, as solar cells contribute nearly 40% of the total module cost. APS plans to hold a majority share (51%) in this subsidiary.
• Phased Development:
• Phase 1 (1 GW): To be operational in the next 18–24 months (expected by end of FY27, March 2027). Initial groundwork and land acquisition in Gujarat have started.
• Subsequent Phases (3 GW): The remaining 3 GW will be added in two subsequent phases at 9–12-month intervals.
• Revenue Potential: The first 1 GW phase of Modules is expected to generate ₹650–750 crore in revenue with an EBITDA margin of 25–30% in the first year of production.
• In-house Utilization: From the first phase, the company plans to utilize 65–70% of the solar cells in-house for module manufacturing. The long-term goal is to cater 50% to APS and 50% to external markets.
• CAPEX: Total Capex for Phase 1 (1 GW) is ₹800–900 crores, covering infrastructure for 2 GW utility-scale capacity. An additional ₹250-300 crores for 1 GW machinery expansion, and another ₹800-1,000 crores for the last phase (2 GW machinery and 2 GW utility). This will be financed through promoter contribution, fund-raising (preferential issue of ₹75-100 crore), and debt, and is eligible for government subsidies (20% from state, 5-10% from central government).
• IRR/Payback: The solar cell project is expected to have an IRR of 30-35% and a payback period of 2-2.5 years.

4. New Businesses and Product Diversification

APS is actively diversifying its product offerings and geographical reach:

• Solar Pumps:
• Product: APS provides solar-powered water pumps, offering a cost-effective solution for irrigation and wastewater treatment in agricultural sectors. APS does not manufacture pumps but provides EPC services for them.
• Growth: Solar pump segment is anticipated to rise from a single-digit contribution in FY23 to around 30% of revenue by FY25/FY26.
• Order Book: Currently, the pump division has an order book of approximately ₹300 crores, with an execution timeline of 12-15 months.
• Geographical Reach: Qualified in 9 states (Gujarat, Maharashtra, Rajasthan, Jharkhand, Bihar, Madhya Pradesh, Haryana, Tripura, Karnataka, and Himachal Pradesh as of earlier reports).
• Margins: Solar pump EPC services offer a margin of approximately 15%.
• EPC Services:
• APS offers EPC services for residential, commercial, industrial, and agricultural sectors.
• Focus: While 67.71% of revenue currently comes from solar module manufacturing, APS plans to aggressively expand EPC services for higher margins. This includes on-grid rooftop solutions for residential, commercial, and industrial use, and solar pump installations.
• Other Products:
• Solar Grid Inverters: APS is the only manufacturer offering both solar panels and inverters under its brand name. APS inverters are locally manufactured, grid-connected, with efficiency of 98.5%, size range of 1 kW to 110 kW, and a 10-year warranty.
• Monocrystalline and TOPCon Solar Modules: APS specializes in manufacturing these modules, catering to various sectors.
• Geographical Expansion:
• APS is distributing to Gujarat, Maharashtra, Rajasthan, Jharkhand, Bihar, Madhya Pradesh, Haryana, Tripura, Himachal Pradesh and Karnataka. The company is actively exploring expansion into other states in coming quarters. APS aims to penetrate South Indian markets for retail sales.
• Export Opportunities:
• Preliminary steps are underway to explore export opportunities in the U.S. and nearby countries. The company has IEC certifications and plans to apply for specific US certifications once the TOPCon line is operational, though exports are not a short-term focus due to high domestic demand.

5. Future Revenue Projections/Estimates

• Overall Growth: APS projects a CAGR of 75% for FY25-26. This conservative target is expected to be sustainable for the next two to three years, possibly slowing to 40-50% CAGR after that.
• FY26 Revenue Expectation: Between ₹750 to ₹800 crores with EBITDA margins of 12.5% to 14% and PAT of 9-10% (approx. ₹75-80 crores).
• FY27 Revenue Expectation: Expected turnover of ₹1,200 to ₹1,300 crores from APS.
• FY28 Revenue Expectation: Standalone turnover from APS and its 100% subsidiary (APS Rooftop Solar Private Limited) is expected to be ₹1,700 to ₹1,800 crores, with an additional ₹600 to ₹700 crores from A plus Solar Cell.
• Segment Contributions:
• Solar pumps are expected to contribute 30% of revenue by FY25/FY26.
• Retail business is expected to contribute 10-15%.
• Wholesale business is expected to contribute the remaining portion.
• Solar Cell Revenue (Phase 1): Once operational, the first 1 GW phase is expected to generate ₹650–750 crore in revenue in its first year, with an EBITDA margin of 25–30%.

6. Financial Performance and Valuations

Key Financial Metrics:

Particulars (INR Cr)	FY23	FY24	FY25	Q1FY26
Total Income	94.96	150.32	441.14	153.23
EBITDA	6.26	9.98	58.82	21.32
EBITDA Margin (%)	6.59%	6.64%	13.33%	13.91%
PAT	3.30	6.15	39.79	14.70
PAT Margin (%)	3.47%	4.09%	9.02%	9.59%
Net Debt/Equity (x)	0.15	0.20	0.09	-
ROCE (%)	29.47%	14.79%	56.90%	-
ROE (%)	22.55%	12.80%	45.25%	-
EPS (INR)	0.00	3.12	20.12	7.45

• Debt: The company is currently net debt-free. It only has a term loan of about ₹20 crores (as of June 2025) for machinery, for which it receives government subsidies, and does not extensively use fund-based limits.

7. Risks Involved in this Investment

• Competition: The solar industry is highly fragmented with organized and unorganized players, leading to rising competition. APS differentiates itself through diversification across retail, distribution, and solar pump segments.
• Dependency on Raw Materials: The company is dependent on suppliers for raw materials, particularly DCR solar cells, which have seen supply limitations. Long-term contracts and planned backward integration into solar cell manufacturing aim to mitigate this risk.
• Geographical Concentration: Historically concentrated in Gujarat, APS is actively expanding its geographical reach to other states.
• Capital Intensive Business: Expansions into new manufacturing capacities and vertical integration require substantial capital expenditure. The company plans to finance this through a combination of internal accruals, debt, and fund-raising.
• Regulatory Changes: Changes in government policies and duties (e.g., duty on glass and frame, DCR requirements) can impact operations and profitability. However, current government policies are very favorable for the Indian solar industry.
• Technology Shifts: Rapid advancements in solar technology (e.g., Monoperc to TOPCon) pose a risk if the company doesn't adapt. APS is addressing this by investing in TOPCon module and cell manufacturing.
• Liquidity/Working Capital: While most of APS's business is cash-and-carry, the solar pump segment has a 60-90 day payment cycle. The company aims to improve cash flow through better margins and creditor negotiations.

My conclusion:

• Exceptional Financial Growth:
• Ambitious Manufacturing Capacity Expansion:
• Strategic Vertical Integration into Solar Cell Manufacturing:
• 4 GW TOPCon Solar Cell Facility: The company plans to enter solar cell manufacturing with a 4 GW TOPCon solar cell facility in Ahmedabad, Gujarat. The first 1 GW phase is expected to be operational in 18-24 months.
• Enhanced Production Capabilities & Margins: This vertical integration is a crucial step towards backward integration, as solar cells contribute nearly 40% of the total module cost, and is expected to significantly enhance production capabilities and improve EBITDA margins by 100-200 basis points.
• Revenue Potential: The first 1 GW phase of solar cell manufacturing is projected to generate ₹650-750 crore in revenue with an EBITDA margin of 25-30% in the first year.
• Diversified Business Model and Market Leadership:
• The company is actively expanding its distribution network from Gujarat to new states like Maharashtra, Rajasthan, Jharkhand, Bihar, Madhya Pradesh, Haryana, Tripura, Himachal Pradesh, and Karnataka. Preliminary steps are also underway to explore export opportunities in the U.S. and nearby countries.
• Favourable Industry Outlook and Government Support:
• Sound Financial Management and Experienced Leadership:
• The company aims to maintain low debt levels and is currently net debt-free. While CapEx for solar cell manufacturing will involve debt, it will be a mix of promoter contribution, fundraising, and debt, with eligibility for government subsidies.

The management is able to maintain the low debt levels even having such massive capex is a very interesting observation in terms of management quality. When compared to its peers like Alpex Solar, Solex energy etc., APS maintaining a very good debt levels. Australian Premium Solar appears to be a company with strong past performance, clear growth drivers, strategic expansion plans, and a supportive market environment, Comparatively Low price multiple, making it a potentially good investment opportunity.

With thanks

Important links to study:

1.     Annual report FY24

2.     Investor presentation – Aug 25

3.     Earnings call transcript – Aug 25

 Disc: Invested