Nextracker: A Solar Leader Poised for Growth Amid Robust Demand and Expansion

Nextracker (NASDAQ: NXT) stands at a pivotal moment in its evolution as a global leader in solar technology. With a backlog exceeding $4.5 billion, margin resilience amid industry challenges, and strategic acquisitions fueling diversification, the company is positioned to capitalize on the solar boom. Add to this its undervalued P/E ratio of 13.57 and tailwinds from U.S. and Indian policy incentives, and Nextracker emerges as a compelling buy for investors seeking exposure to renewable energy's growth story.

Market Leadership & Backlog Strength: A Foundation for Growth

Nextracker's backlog of over $4.5 billion as of March 2025 reflects its dominant position in the solar tracker market. The company has secured bookings across 40+ countries, with standout growth in regions like Europe (Spain, Greece), Latin America (Peru, Chile), and the U.S. The backlog is further bolstered by demand for its high-margin products, such as the NX Horizon Hail Pro™ series (designed for extreme weather resilience) and the XTR terrain-following trackers.

The addition of the Bentek acquisition—which expanded Nextracker's offerings to include electrical balance-of-systems (eBOS) solutions—has diversified its revenue streams. Non-tracker revenue now accounts for ~20% of bookings, reducing reliance on cyclical tracker demand and enhancing profitability.

Margin Resilience: Outperforming Industry Headwinds

While solar companies grapple with cost pressures and supply chain constraints, Nextracker has demonstrated remarkable margin discipline. In Q2 FY2025, its GAAP gross margin expanded to 35.4%, up from 26% a year earlier, driven by operational efficiencies, cost management, and higher-margin products like the NX Foundation Solutions. The adjusted EBITDA margin of 27.2% in Q2 FY2025 further underscores its ability to convert growth into profit.

The company's focus on domestic content projects in the U.S.—including the first 100% U.S.-made trackers compliant with Treasury safe harbor rules—has also provided a pricing advantage. These projects, supported by the Inflation Reduction Act's (IRA) tax credits, are expected to contribute meaningfully to FY2026 revenue.

Acquisitions: Building a Comprehensive Solar Platform

Nextracker's acquisition of Bentek Corporation (eBOS solutions) and its expansion into software via TrueCapture™ yield optimization tools have transformed it into a full-stack solar solutions provider. This diversification reduces customer project complexity and creates cross-selling opportunities. For instance, Bentek's eBOS systems now integrate seamlessly with Nextracker's trackers, offering customers a “one-stop” supply chain that lowers logistics costs and risks.

The company's India expansion, including a new R&D center in Hyderabad, aligns with India's PLI scheme, which incentivizes domestic manufacturing of solar components. This move positions Nextracker to capture a share of India's ~$30 billion solar market, where it is now the top tracker supplier.

Valuation: An Undervalued Growth Story

At a P/E ratio of 13.57 (vs. ~13.17 for peer First Solar and 11.34 for Array Technologies), Nextracker trades at a discount to its growth trajectory. Its FY2026 revenue guidance of $3.2–3.4 billion represents a 13% YoY increase, while adjusted EBITDA is projected to reach $700–775 million. With a free cash flow yield of 10.7%, the company has ample liquidity ($766 million cash) to fund growth and acquisitions without dilution.

Catalysts to Watch: IRA Bookings & India Momentum

• IRA-Driven Demand: Nextracker's domestic content projects are expected to generate ~$1 billion in FY2026 revenue, leveraging the IRA's 30% investment tax credit for U.S.-made systems.
• India's PLI Scheme: The Hyderabad R&D hub and partnerships with local manufacturers could accelerate its market share in India, which aims to achieve 500 GW of solar capacity by 2030.
• FY2026 Earnings Surprise Potential: Management has guided for margin expansion despite higher R&D spending, suggesting operational leverage in its scale-up.

Risks, but Mitigated by Strong Backlog

• Policy Risks: Changes to U.S. trade policies or solar tax credits could impact demand.
• Supply Chain Volatility: Global semiconductor shortages or raw material cost spikes may pressure margins.

However, Nextracker's contracted backlog and diversified geographic exposure reduce execution risk. The company has also secured partnerships with ~90 global manufacturing facilities, ensuring supply chain flexibility.

Conclusion: A Buy with Upside

Nextracker's combination of backlog strength, margin resilience, and strategic moves into adjacent markets (eBOS, software) positions it to outperform in a growing solar sector. At a P/E of 13.57, the stock offers a rare blend of valuation discipline and high-growth potential. Investors should view dips below $45 as opportunities to establish positions, with catalysts like IRA bookings and FY2026 earnings poised to drive multiple expansion.

Recommendation: Buy Nextracker (NXT) for investors with a 1–3 year horizon focused on renewable energy's structural growth. Set a target price of $60–$65 by mid-2026, reflecting 20%+ upside.