Powerica Ltd shares have gained nearly 48% from their initial public offering (IPO) price of ₹395, closing at ₹584.85 on Friday. Listed on the BSE and NSE on 2 April 2026, the stock has also advanced 34.51% over the past six months.
Despite the sharp gains, Nuvama Institutional Equities sees further upside in the stock, initiating coverage with a Buy rating and a target price of ₹700. This implies an upside potential of around 20% from Friday’s closing price.
Nuvama’s bullish view rests on three growth drivers: a recovery in the company’s diesel generator (DG) business, expansion of its wind independent power producer (IPP) portfolio and the long-term opportunity in retrofit emission control devices (RECDs).
Why is Nuvama bullish on Powerica?
Powerica’s diversified power-solutions portfolio spans DG sets, wind power generation and RECDs. Nuvama expects these businesses to deliver strong earnings growth over FY26–FY29, supported by rising data centre demand, more efficient wind turbines and wider adoption of emission-control technology.
The brokerage projects a compound annual growth rate (CAGR) of around 21% in DG business profit after tax (PAT), 44% in wind IPP earnings before interest, taxes, depreciation and amortisation (EBITDA), and 27% in RECD PAT over FY26–FY29.
1. Data centres could drive DG business growth
Powerica’s DG business provides a steady cash-generating base, supported by its position as one of only three generator original equipment manufacturers (GOEMs) for Cummins in India.
The company is positioned to benefit from India’s expanding data centre infrastructure, particularly in southern and western India. Nuvama highlighted Powerica’s data centre order book of around ₹1,100 crore, compared with FY26 data centre sales of approximately ₹340 crore, providing visibility for future growth.
The brokerage expects margins to recover as the company passes on Cummins’ price hikes to customers. A revival in industrial capital expenditure could provide an additional boost.
However, the recovery depends on Powerica’s ability to pass on higher costs. Nuvama cautioned that failure to absorb or pass through price increases amid rising commodity costs could weigh on DG margins.
2. Wind capacity expansion could lift earnings
Powerica’s wind power business is another key pillar of Nuvama’s investment thesis. The company’s wind capacity is expected to increase from approximately 330 MW to 631 MW by FY29, supported by secured letters of award (LOAs).
The portfolio is also shifting towards newer, more efficient turbines. Their share is projected to rise from 65% to around 82% by FY29. These newer assets can deliver plant load factors (PLFs) above 30% and EBITDA margins of around 80%, improving the economics of the overall portfolio.
Nuvama expects the blended PLF to reach approximately 29.4% and the wind business EBITDA margin to approach 77% by FY29. This underpins its forecast of 44% EBITDA CAGR for the wind IPP business over FY26–FY29.
3. RECDs offer a longer-term growth opportunity
Powerica’s RECD business remains relatively small but could become a meaningful growth driver as emission-control requirements expand. Nuvama estimates the addressable market at around ₹60,000 crore, with only five to six certified competitors.
The brokerage highlighted the business’s potential return on equity of approximately 47%, while identifying the rollout of RECD mandates across states and the company’s ability to win orders as important variables.
Can Powerica improve returns on capital?
Nuvama believes Powerica’s reported earnings do not fully reflect its cash-generation potential. Operating cash flow stood at around 170% of PAT in FY26, while its wind assets generate cash returns on equity of approximately 15–17%.
The brokerage expects consolidated return on equity to improve from around 12% in FY27 to 14.4% by FY30, as new wind projects are funded with a debt-to-equity mix closer to 70:30.
Nuvama considers valuations attractive, citing FY29 estimated enterprise value-to-EBITDA of around 6.8 times for the wind business and a price-to-earnings multiple of around 21 times for DG sets.
Key risks include the ability to pass on price increases, a sustained recovery in private-sector capital expenditure, timely commissioning of wind capacity, expansion of RECD mandates and securing wind projects at profitable tariffs.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
