Brokerage firm Kotak Institutional Equities believes that Indian solar manufacturers like Waaree Energies Ltd. and Premier Energies Ltd. are at risk post the Donald Trump administration’s decisions to halt the Inflation Reduction Act (IRA) fund disbursements and other green infrastructure funding initiatives worth $300 billion until further notice.

The brokerage said that the move will impact both Independent Power Producers (IPPs) in the US as well as domestic module manufacturers.

“While the halt is temporary, it can potentially turn into a complete repeal of IRA incentives, which will negatively impact Indian solar manufacturers like Waaree and Premier,” the brokerage wrote in its note.

Calling it “Terminating the Green New Deal”, the Trump administration paused all funding disbursements for Infrastructure Investment and Jobs Act, which were former President Joe Biden’s domestic policy agenda to roll out billions in federal funding for clean energy construction and manufacturing projects.

The Federal agencies have a 90-day deadline to submit reviews and spending recommendations on this subject.

However, Kotak has not factored any impact on both Premier and Waaree yet, since the measures are temporary. Their scenario analysis suggests that a complete repeal of the IRA will result in a cut to Waaree’s price target to ₹2,000 from ₹2,500 earlier and for Premier to ₹580 from ₹770 earlier.

The brokerage said that Waaree is more vulnerable compared to Premier in the near-term, considering it was India’s largest solar exporter with a 44% share and generating nearly 60% of its financial year 2024 revenue from US exports, compared to only 14% for Premier.

Waaree has also commissioned a 1.6 GW solar module plant in Texas, US, which is expected to make hefty margins aided by a $7 cents per watt IRA incentives. On the flip side, Premier’s cell plant is still in the design phase with no significant capital committed.

A majority of Waaree’s nearly 20 GW order book is from US customers, Kotak wrote in its note.

Kotak had initiated coverage on both Premier and Waaree earlier this month with a “sell” rating on both these names, citing expensive valuations.

Shares of Waaree are currently trading little changed at ₹2,341. The stock is down 38% from its post-listing peak of ₹3,743. On the other hand, shares of Premier Energies are trading 1.6% lower on Friday at ₹1,020. The stock is down 26% from its post-listing high of ₹1,388.