Mumbai, March 30 -- Amid excess capacity and rising competition, renewable energy firms in India are looking to diversify beyond their core businesses to capture a larger share of the value chain, improve margins through integration and enhance valuations, industry experts said. India's solar module manufacturing capacity surged from 11.1 gigawatts (GW) in March 2022 to 109.5GW by September 2025, data from Icra shows. This surge has even prompted lenders to turn cautious on the sector, Mint reported on 19 March. Pure play companies in businesses such as solar module manufacturing and renewable power production are looking to enter adjacencies to not only capture a larger share of the renewable energy value chain, but also to achieve better costs, and thus margins, through backward integration, they said. This also helps them attract customers by offering turnkey solutions, eliminating the need for the client to engage with multiple vendors. Investors have also pushed firms to diversify to achieve better valuations over their pure-play peers that focus on one business, experts said. Companies such as Waaree Energies, Vikram Solar, Premier Energies, ACME Group, and Suzlon Energy are some of the players that have diversified after scaling their core business. This is different from top conglomerates like the Adani Group, Tata Power and Reliance Industries Ltd, which planned a presence across the renewable energy value chain since conceptualization. "Diversification is one of the top themes in the renewable energy space right now," said Harshraj Aggarwal, executive vice-president-institutional equity research at Yes Securities. Backward and forward integration in the supply chain gives companies better control over the products and improves margins, he said. Backward integration is about manufacturing an input material that goes into your business, such as a solar module firm gradually starting to make cells, ingots, wafers and eventually polysilicon. Forward integration is using one's products to further add value, like a solar module maker using its products to set up a renewable energy plant. In a push for its energy transition goals, the government promotes localization of solar modules, its components and wind turbines through a host of policy measures. Getting into adjacencies allows companies to bundle products to give better service to their customers, setting them apart from competition, Aggarwal said. Consider a solar module company also making batteries for energy storage systems, providing a power producer with the most critical equipment under one brand. Waaree Energies, India's largest manufacturer of solar modules and arguably one of the biggest winners of the renewable energy transition over the past decade, has also been the most aggressive of the lot in diversifying. Over the past year, the company directly or through its subsidiaries acquired a majority stake in transformer manufacturer Kotsons Pvt. Ltd, transmission towers maker Associated Power Structures Ltd, smart meter maker Racemosa Energy (India) Pvt. Ltd and power producer Enel Green Power India. Additionally, Waree invested $30 million to acquire a strategic stake in an Oman-based maker of polysilicon via its subsidiary in the US to ensure traceable supply for its American customers. These acquisitions cost the company upwards of Rs.2,700 crore, as per Mint's calculation. The company did not respond to request for a comment....