Waaree Energies: India’s largest manufacturer and exporter of solar modules

Waaree Energies: India’s largest manufacturer and exporter of solar modules

Waaree Energies makes most of its money by manufacturing and selling solar panels (modules), with smaller but fast‑growing revenue from EPC (turnkey solar projects) and a tiny share from power generation.

What Waaree sells and where money comes from

• The core business is solar PV modules (panels) sold to power plants, commercial/industrial rooftops, and exports; this accounts for roughly mid‑80% of revenue in recent periods. ​

• EPC (engineering, procurement, construction) projects – Waaree designs, procures equipment, and builds solar plants for clients, including O&M services – contribute a low-to-mid-single-digit percentage of revenue but are growing very fast. ​

• A tiny portion (well below 1%) currently comes from owning solar assets and selling power.​

• Geographically, Waaree sells to Indian utility/C&I/rooftop customers and also exports modules, with India as its main base, and exports are a key growth driver given its status as one of the largest module exporters from India.​

Key revenue drivers:

• Volumes: A capacity of about 15 GW of modules and a multi‑GW order book mean revenue growth mainly from selling more MW of panels and executing more EPC MW.​

• Pricing power: Module prices are competitive and are influenced by global polysilicon and Chinese pricing, so Waaree’s advantage lies more in cost efficiency and scale than in charging very high prices.​

• Mix and repeat orders: Higher‑efficiency or specialised modules and bundled EPC/O&M improve unit economics; large utilities and C&I customers often place repeat orders once performance is proven.​

Waaree Energies Versus Its Peers

Aspect	Waaree Energies	Vikram Solar	Adani Solar	Premier Energies
Main Business	Solar panels (modules) sold globally	Solar panels + EPC projects globally	Solar panels + full vertical integration	Solar panels + cells + domestic rooftop focus
Manufacturing Capacity (Modules)	15 GW (largest)	4.5 GW, growing to 20.5 GW by FY27	4 GW, growing to 10 GW by 2027	5.1 GW, growing to 11 GW by 2028
Cell Capacity	5.4 GW (backward integrated)	12 GW planned (ambitious)	2 GW (cells + wafers integrated)	2 GW (PERC + TOPCon)
Profitability (EBITDA Margin)	18.8%	14.4%	Not public (conglomerate)	27.3% (highest)
Where Revenue Comes From	~70% exports, 30% domestic	Mixed export/domestic focus	Vertically integrated	100% domestic
Order Book Size	25,000 MW (massive visibility)	10,340 MW	Not disclosed	5,545 MW

What Makes Waaree's Moats (Competitive Advantages)

A moat is like a castle's protective ditch—it makes it hard for competitors to compete with you. Waaree has some serious moats:

1. Manufacturing Scale (Biggest Moat): Waaree has 15 GW of module capacity. To match this, Vikram needs to build 11 more GW, Premier needs 10 more GW, and Adani needs six more GW. Building factories takes 2–3 years and billions of rupees. Meanwhile, Waaree's existing factories spread their fixed costs (rent, salaries, depreciation) across more units, making each panel cheaper to produce. This is called operating leverage—Waaree's big advantage.

2. Export Dominance: Over 70% of Waaree's revenue comes from exports to countries like Australia, Thailand, Japan, and the USA. This is powerful because:

   • Global demand for solar is huge and growing.

   • Being a trusted "Made in India" exporter gives Waaree pricing power.

   • Exporting spreads risk—if the Indian market slows, Waaree still has global revenue.

3. Backward Integration: Waaree owns cell-making capacity (5.4 GW). This means it doesn't have to buy cells from other companies; it makes its own. This protects Waaree from cell price spikes and gives it better control over quality. Competitors like Vikram are just now building cell capacity, so Waaree has a 2–3 year head start.​

4. Brand Trust for 25-Year Assets: Solar panels last 25+ years. Lenders and investors want to know the panel maker won't go bankrupt mid-way through the asset's life. Waaree, established in 1990 and operating since 2007, has proven staying power. Vikram is newer (and just went public), and while Premier is growing fast, Waaree's track record inspires confidence. This translates to winning big utility contracts.​

Waaree Energies: Major Risks & Opportunities

Waaree Energies is at an inflection point. In just three years, the company has transformed from a mid-tier solar manufacturer into India's largest solar module maker, with ROIC of 34%, EBITDA margins of 25%+, and a ₹47,000 crore order book providing 2+ years of revenue visibility.

RISK 1: U.S. Tariff & Trade War Threatens 57% of Order Book

Waaree's ₹47,000-crore order book is 57% U.S. exposed (₹26,500 crore). Trump's 26% reciprocal tariff (April 2025) and CBP's anti-dumping investigation threaten the viability of the industry. If duties reach 35-50%, the annual U.S. revenue of ₹1,500-3,000 crore could vanish. Texas manufacturing plant (1.6 GW expandable to 3 GW) offers partial mitigation. Investigation outcome expected Q1-Q2 2026.

RISK 2: Chinese Solar Module Dumping Intensifies; Domestic Margin Erosion Inevitable

Chinese manufacturers control 75% of India's solar market (up from 50% YoY) and are aggressively dumping modules at rock-bottom prices. India's 150-160 GW of overcapacity by FY27, versus 30-50 GW of demand, creates a 2.5-3x glut. Domestic module prices falling 8-12% already; expect 15-25% more by FY27. Waaree's domestic revenue of ₹4,500 crore could face 300-500 bps margin compression—a structural threat despite the backward integration advantage.

RISK 3: Capex Execution Fails; ₹25,000 Crore Investment Becomes Stranded Asset

Waaree is committed to investing ₹25,000+ crore over FY26-FY28 to fund 26 GW of modules, 16 GW of cells, and 20 GWh of BESS. India's capex execution historically runs 15-30% over budget and 6-12 months behind schedule. Delays would leave new capacity underutilised (60-70% vs. the 85% target), thereby expanding the fixed cost burden. EBITDA misses of 20-30% possible. Negative FCF persists longer. Monitor quarterly capex spend closely; any management delays signal trouble.

RISK 4: Backward Integration into Cells Underperforms; Margin Uplift Disappoints

Waaree targets 16 GW of cell capacity by FY27 (from 5.4 GW), promising a 3-5% cost reduction through internal supply. But cell manufacturing is operationally complex; execution struggles are everyday. If competitors simultaneously scale cells, market oversupply erodes price benefits. The expected 300-500 bps margin uplift could shrink to 100-200 bps.

RISK 5: BESS Market Entry Faces Fierce Competition; ₹80 Billion Capex ROI Uncertain

Waaree announced ₹80 billion capex for BESS expansion (3.5 GWh → 20 GWh), but is entering a nascent, crowded market dominated by Reliance, Adani, Tesla, and CATL. Waaree has no track record of battery performance; technology risk is high. BESS costs falling 15-20% YoY globally; margin compression inevitable. The expected 25-30% EBITDA margin could compress to 12-15%.

RISK 6: Working Capital Drain; FCF Remains Negative Longer Than Expected

FY25 free cash flow turned negative (₹-1,200 crore) due to heavy capex despite ₹3,158 crore operating cash flow. With ₹25,000 crore capex ongoing and inventory buildups from rapid growth, working capital management is critical. If receivables stretch, inventory builds, or payables shrink, FCF remains negative through FY27. The company may need external funding (debt or equity dilution) if the capex payoff is delayed. Dividend sustainability is questionable.

RISK 7: Customer Concentration; Large Orders Can Swing Quarterly Results

Waaree's ₹47,000 crore order book appears solid, but its composition is unclear. If the order book is concentrated among a few large utilities or EPC players, the loss of a single customer could swing revenue by 10-20%. Management doesn't disclose customer concentration data (the top 5 customers as a % of revenue). Quarterly results could be lumpy due to significant project deferrals or cancellations. Order quality and contract terms (cancellation clauses) are unknown.

RISK 8: Technology Obsolescence; PERC Modules Become Commodity as TOPCon/HJT Scales

Current production: 95% PERC modules (21% efficiency, commodity pricing). Market shifting toward TOPCon (22-23%) and HJT (23-24%), commanding 10-15% premiums. If Waaree's PERC capacity ramps faster than premium tech adoption, modules face pricing pressure. Inventory of older PERC capacity could require markdowns. Perovskite (30%+ efficiency) could accelerate obsolescence. Management: R&D investment in premium tech is critical; execution risk is high.

RISK 9: Regulatory & Policy Risk; ALMM Changes, PLI Subsidy Cuts, Import Tariffs

Indian government policies (ALMM approval, PLI incentive structure, import tariffs) are pillars of Waaree's competitiveness. Policy reversals or subsidy reductions could undermine capex ROI and profitability. The government might reduce PLI subsidies, modify domestic content requirements, or impose new regulations. Political change could shift the focus of renewable energy—there is no long-term policy certainty in India. Investors must closely monitor the policy environment.

RISK 10: Currency Volatility; INR Depreciation Erodes Export Revenue

Waaree exports 70% of revenue in USD and foreign currencies. A strong INR (vs. USD) directly erodes export revenue when converted back into INR. FY25 benefited from INR weakness; future INR appreciation could reduce export margins by 200-300 bps. Conversely, INR weakness raises input costs for imported raw materials (such as polysilicon, cells, and glass from China). Currency risk is two-sided; management's hedging strategy is undisclosed.

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OPPORTUNITY 1: India's Solar Mega Boom Drives 30-50% Volume Growth

India targets 500 GW of renewable energy by 2030 (182 GW solar). Current demand: 30-40 GW/year; projected to reach 45-50 GW/year by FY28. PM Surya Ghar (50 GW of residential rooftop solar), EV charging infrastructure, and industrial solar create structural tailwinds. Waaree's production capacity FY28: 20+ GW (vs. 5-6 GW today). At 20% market share: revenue ₹12,000-15,000 crore (+100% growth). Operating leverage: margins could expand to 27-30%.

OPPORTUNITY 2: Backward Integration into Cells Delivers Major Cost Advantage

Waaree scaling from 5.4 GW to 16 GW cell capacity by FY27. Internal cell cost: ₹5-6 per watt vs. ₹8-10/Wp imported from China. Cost saving: ₹2-4 per watt = ₹30-60 crore per GW. Gross margin expansion: 32-35% → 36-40% (+300-500 bps). On ₹5,500-6,000 crore EBITDA base: +₹150-300 crore uplift. Vertical integration also reduces Chinese supply chain risk and accelerates technology migration to TOPCon/HJT.

OPPORTUNITY 3: Export Diversification Beyond U.S.; Global Market Penetration

Waaree exports to 25+ countries, but 57% of the order book is concentrated in the U.S. (tariff risk). Global solar demand: 200+ GW annually; Australia, Japan, Southeast Asia, and the Middle East offer premium pricing (15-20% above India domestic). Diversifying to premium export markets could increase export revenue from ₹10,000 crore to ₹15,000-18,000 crore. Geographic mix shift adds ₹500-1,000 crore EBITDA from premium pricing—De-risks U.S. concentration.

OPPORTUNITY 4: Full-Stack Energy Solutions; Bundling Modules + BESS + EPC for Higher Margins

Today: Waaree sells modules (commodity). Tomorrow: One-stop solar-storage-EPC bundles with 40-50% higher margins. BESS and O&M have EBITDA margins of 28-32% (vs. 25% for modules). Bundle mix by FY28: modules ₹8,000 cr + EPC ₹2,500 cr + BESS ₹2,500 cr = ₹13,000 crore. Blended EBITDA margin: 27-30% (vs. 25% pure modules). Customer lock-in: 5-10 year O&M contracts = recurring revenue. Creates a competitive moat.

OPPORTUNITY 5: Technology Leadership in Premium Modules; Premium Pricing & Market Share

PERC modules (21% efficiency, commodity) shifting to TOPCon (22-23%, +10-15% premium) and HJT (23-24%, +20-30% premium). Waaree invested in all technologies; Perovskite (30%+) R&D underway. Market mix by FY28: 50% premium, 50% commodity. Blended ASP: ₹20.50-21.50/Wp (vs. ₹20/Wp today). Premium modules have an EBITDA margin 200-300 bps higher. Technology leadership = long-term moat. Early movers capture share; competitors commoditised.

OPPORTUNITY 6: Operating Leverage from Near-Full Capacity Utilisation

FY26 EBITDA guidance of ₹5,500-6,000 crore represents 38-42% of revenue—extremely high, implying near-full capacity utilisation (85%+). As new capacity (26 GW by FY27) ramps up to 85%+ utilisation, fixed costs spread across more units. EBITDA margin could expand from 25% to 27-30% (operating leverage kick). High capacity utilisation is critical to hitting guidance; underutilisation would severely pressure margins and justify a downward valuation reset.

OPPORTUNITY 7: EPC Business Scaling; Higher Margin Turnkey Project Revenue

Waaree's EPC (engineering, procurement, construction) is currently small (~5-10% of revenue). Market opportunity: 200+ GW utility-scale projects in India; 50+ GW C&I rooftop. EPC projects have an EBITDA margin of 20-25% (higher than the 15% for modules). Scaling EPC to 10-15% of revenue by FY28 = ₹1,500-2,250 crore. Margin uplift: 100-150 bps overall blended margin. Also deepens customer relationships for repeat orders and O&M contracts.

OPPORTUNITY 8: O&M (Operations & Maintenance) Recurring Revenue Stream

O&M is the highest-margin business: 30-35% EBITDA margins (vs. 25% modules). Today, minimal, but every solar plant needs 25-year maintenance. Waaree's installed base: 5+ GW globally. At ₹50-60 crore per GW annual O&M revenue: ₹250-300 crore potential. By FY28, could scale to ₹500-700 crore O&M revenue (highest-margin, recurring). Creates sticky customer relationships, improves predictability, and funds capex. Often overlooked but powerful value driver.

OPPORTUNITY 9: Ancillary Business Expansion (Inverters, Transformers, Smart Meters)

Waaree announced acquisitions in transformers and smart meters, and plans to build 4 GW of inverter capacity. Inverters have an EBITDA margin of 22-25%. By FY28, ancillary revenue could reach ₹2,000-3,000 crore (10-15% of total revenue). Margin contribution: 100-200 bps blended uplift. Creates ecosystem lock-in; customers are reluctant to switch when fully integrated with Waaree's products.

OPPORTUNITY 10: Government Tailwinds: PLI Subsidies, Make in India Push, Anti-China Tariffs

The Indian government is backing Waaree through PLI (Production-Linked Incentive) subsidies, domestic content requirements (DCR), and anti-China tariffs that protect domestic players. These policies reduce Waaree's competitive pressure from Chinese imports, enable higher domestic pricing, and subsidise capex. The Make in India initiative positions Waaree as a national champion. As geopolitical tensions with China intensify, government support is likely to strengthen. Policy tailwinds could add EBITDA of ₹200-400 crore by FY28.

Waaree Energies: Earnings Call Analysis

Q2 FY26 (October 2025): "Record Everything"​

Revenue ₹6,226 crores (+70% YoY), EBITDA ₹1,567 crores (+155% YoY), EBITDA margin 25.17% (maintained peak), PAT ₹878 crores (+134% YoY).

Production hit 2.64 GW (new record; 15% higher than Q1).

H1 FY26 Summary:

• Combined revenue: ₹10,823 crores (+51% YoY)

• Combined EBITDA: ₹2,735 crores (+118% YoY)

• Combined PAT: ₹1,651 crores (+113% YoY)

Interim dividend: ₹2 per share (second dividend; signalling very strong cash confidence).

MAJOR ANNOUNCEMENT: Board approved ₹80 billion (₹8,000 crores) capex for BESS (Battery Energy Storage Systems). Plans to expand BESS capacity from 3.5 GWh to 20 GWh.

Guidance reaffirmed: ₹5,500–6,000 crores (but now appears very conservative; H1 alone is already 50%+ of guidance).

Key takeaway: Margins holding at 25%+; production scaling ahead of schedule; but capex commitments now massive (₹80 billion BESS alone). Company evolving from "solar module maker" to "full energy solutions provider."

Waaree Energies exhibits exceptional value-creation metrics (ROIC of 34.4% and WACC of 12.4%). Market leadership (17.3% share), backward integration (5.4 GW cells), and ₹47,000 crore order book provide competitive moats. Key risks: U.S. tariffs (₹26,500 crore exposed), Chinese competition, and capex execution.