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Borosil Renewables (English Video)


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The sun is the biggest source of energy known to man. Thus, solar energy has the biggest potential as a renewable resource. Given the rising energy requirement of our planet and the environmental destruction caused by fossil fuels, solar energy looks to be the go-to choice for energy generation.

But how do investors look to invest across this sector? Is it necessary to go for large companies like Adani Green Energy or Reliance Industries only? Another option is to invest in the solar sector through companies that make critical components for this sector. Borosil Renewables is one such company.

Borosil Renewables is part of the Borosil family which is the market leader in the consumer glassware space in India. The X factor for the group is undoubtedly the making of glass for use in solar cell assembly. Borosil Renewables has over 100 domestic customers. The company also has a good international presence as well with 20% of revenues coming from exports.

Borosil Renewables has a dominant 40% market share in the domestic market. But the rest of the market is mainly serviced through cheaper imports from China, Malaysia, and others. To encourage domestic makers to step into this solar space, the Government of India announced a PLI scheme for solar cell making of 24,000 crore Rupees last year which is expected to benefit firms like Borosil Renewables.

But Borosil Renewables is firmly concentrated on preserving its 1st mover advantage and is looking to expand from its current capacity of 450 tons per day to over 2100 tons per day by the end of 2024.

So, what is our view on company valuation?

Borosil Renewables’ share price has seen a rise of around 200% in the last 5 years. Nifty 50 has risen around 75% in the same period. The company trades at a Price to Earnings (TTM) of around 50 times, whereas Asahi India Glass traded at 35 times. The company trades at an EV/EBITDA (TTM) of around 30 times. Based on the expected future growth of the solar industry in India and the aggressive expansion plans for the company, it is expected that Borosil Renewables will deliver around 20% revenue CAGR for the next few years.

At the current valuation, the stock appears to be expensive by industry standards. But given its potential and the massive scope for the solar space in India, it is a good stock for long term investors to evaluate.

As for the risks to this analysis, although the company has a high market share of 40%, it has almost no pricing power and must stay close to imported product prices. Borosil Renewables’ margins had stayed subdued before Fiscal Year 2021 mainly due to the presence of cheaper imported goods in the market by Chinese and Malaysian competitors. The Government of India has instituted anti-dumping duty in this space to promote domestic manufacturing, it is still not a reliable tool until the industry is able to combat imported products on its own.

So, would you invest in Borosil Renewables?

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