The fall comes after a sharp run-up earlier, as investors reassess margins and export visibility in a market facing oversupply.
The industry is already dealing with a supply glut. Domestic module manufacturing capacity has expanded rapidly in recent years, crossing 160 GW, while annual installations remain closer to 40-45 GW. This mismatch has led to pricing pressure and margin compression.
Manufacturers are grappling with intense pricing pressure and competition among suppliers as capacity has outpaced demand. The US market has historically accounted for a significant portion of India’s solar exports, with shipments worth about Rs 34,000 crore between April 2023 and November 2025.
The latest trigger came on February 24, when the US Department of Commerce announced a preliminary countervailing duty of 126% on certain solar imports from India. It also proposed duties on imports from Indonesia and Laos.
At first glance, the 126% duty appears severe. However, Motilal Oswal said its applicability depends on the country of origin of the solar cells used in modules supplied to the US. In effect, the tariff would apply only if the modules use solar cells manufactured in India.
For Waaree Energies, which earns roughly a third of its revenue from the US, the brokerage said the impact is likely limited because it does not use Indian-made solar cells for its US supplies. Premier Energies, meanwhile, derives only about 1% of revenue from overseas markets and remains largely insulated.Still, the broader signal is negative. Arpit Jain, Joint MD at Arihant Capital Markets, said the solar sector is clearly in an oversupply phase. “Aggressive capacity addition, especially in modules, has created a global demand-supply imbalance and pressured prices. The new US duties add another layer of uncertainty.”
He said companies with manufacturing facilities in the US or plans to set up plants there are structurally better placed. They can benefit from local incentives and avoid tariff-related disruptions. Export-heavy companies without geographic diversification face greater risks.
India’s cell manufacturing capacity is still ramping up and is largely geared towards meeting domestic demand.
Motilal Oswal estimates cell capacity at about 27 GW under ALMM-II, compared with module capacity of 162 GW under ALMM-I. Surplus availability for exports is likely limited at least until FY28. That could restrict the scale at which Indian manufacturers can serve export markets even if tariffs ease.
Sourav Choudhary, Managing Director at Raghunath Capital, said the industry is entering a more differentiated phase. He pointed out that manufacturers remain at the epicentre of the stress cycle. In a scenario where export avenues narrow due to tariffs, surplus inventory may be redirected into already competitive markets, further pressuring prices and stretching working capital cycles.
He added that integrated players with backward integration into cells and wafers are better positioned to manage costs. However, module manufacturing remains cyclical and exposed to global trade regimes.
On the other hand, renewable power producers operating under long-term power purchase agreements are less exposed to module price swings. Choudhary said independent power producers benefit from contracted revenue streams rather than manufacturing margins. Their earnings visibility depends more on project execution and financing costs than on global module prices.
EPC and project developers sit somewhere in between. Their revenues depend on installation demand rather than module spreads. Execution risks and tender pricing remain factors, but structural renewable capacity addition offers medium-term support.
Despite near-term stress, most analysts agree that the long-term renewable energy story remains intact. India’s target of 500 GW of non-fossil capacity by 2030, corporate decarbonisation goals and policy support such as PLI schemes provide a strong structural backdrop.
Jain said the current correction, with some solar stocks down 40-70% from their peaks, reflects oversupply concerns and policy uncertainty. For long-term investors, this phase could offer selective opportunities in companies with strong balance sheets, integrated operations and access to key markets.
Margins have been under pressure due to falling module prices, but some players are seeing stabilisation as raw material costs cool and supply growth moderates. In the near term, volatility is likely to persist. If the US duties are finalised in mid-2026 at current levels, export economics could become unviable for some players unless they adapt supply chains.
The sector is not in decline, but it is in transition. The next cycle will favour companies with scale, integration, financial discipline and diversified markets. Oversupply and tariffs may reshape the industry, but they are unlikely to derail India’s broader solar growth story.
Regarding individual stocks, Motilal Oswal has a target price of Rs 3,514 on Waaree as the domestic module business is valued at 13x FY28E EBITDA. The US module business is valued at 12x FY28E EBITDA, which is in line with global peers. Meanwhile, the broker sees Premier Energies to reach Rs 1,000.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times.)