The implementation of the Approved List of Models and Manufacturers (ALMM) from April 1, 2024, is expected to help keep operating margins of domestic module makers strong at 12-14 per cent in FY25, in line with the level likely this fiscal, according to research agency, CRISIL.
It added that healthy domestic and export demand will help, too. “This fiscal, the profitability is expected to almost double over the previous fiscal as rising share of exports, which fetch a 15-20 per cent premium over domestic prices, will more than offset the surge in imports in the absence of ALMM,” said the official press release.
According to Ankit Hakhu, Director, CRISIL Ratings, Indian module manufacturers are facing an onslaught of cheaper imports because of the temporary suspension of ALMM till April 1, 2024. However, the trade restrictions on China — mainly by the US — are boosting overseas demand for Indian modules.
“In fact, India’s module exports are seen tripling to 8-9 GW this fiscal. Markets abroad will stay good for Indian manufacturers next fiscal, too, as the US will continue to face a supply deficit due to its increasing demand and continuing restrictions on Chinese supply,” he said.
With ALMM coming back, domestic demand for Indian modules will become stronger.
“The return of ALMM in FY25 should curb the competition from imports. As a result, we expect domestic module prices to firm up after having fallen by more than 50 per cent this fiscal. Moreover, demand growth will increase utilisation rates, as 70-75 per cent of domestic demand will be met by Indian module producers next fiscal, up from 30-35 per cent this fiscal,” said Ankush Tyagi, associate director, CRISIL Ratings.
He added that these factors would help offset the pressure on profitability due to the decline in the share of exports for domestic module manufacturers to 35-40 per cent in FY25 from 50 per cent in FY24.
CRISIL further said that higher sales volumes and healthy margins would lead to robust accruals for module makers rated by it in the current and next fiscals. This will support capital expenditure for capacity expansion and technology upgrade and sustain healthy credit profiles.
