Buy Waaree Energies Ltd for the Target Rs 3,115 by Prabhudas Liladhar Ltd
US Footprint & Backward Integration to Unlock growth
Waaree Energies (WAAREEEN) reported a 23.8% YoY growth in revenue however, EBITDA declined 5.9% YoY with EBITDA margin contracting 550bps to 17.6%. Profitability was impacted by a sharp decline in exports from India amid uncertainty surrounding US Section 232 tariffs and the consequent rationalisation of export orders. Sequentially, margins improved on supported by higher cell production and improved utilisation at the US module manufacturing facility. Going forward, management expects margin expansion, driven by the commissioning of the 10GW solar cell facility, higher utilisation of US manufacturing facilities, and improved US realizations following the implementation of minimum import price regulations. The company reported a robust order book of ~INR592bn (25.6GW module orders), while retail revenue surged 252.9% YoY to INR34.6bn in Q2FY27, accounting for 46.1% of revenue; management expects retail revenue to reach INR100-110bn in FY27. Domestic US manufacturing revenue grew 113% YoY in H1FY27, with US module manufacturing capacity expected to reach 4.8GW by Mar’27, including an additional 1.6GW capacity scheduled to become operational in Q3FY27. The company reiterated its FY27 operating EBITDA guidance of INR70-77bn and remains on track with its ~INR300bn capex Programme, including the 10GW cell expansion, 5GWh BESS containerization facility, 3.5GWh battery cell manufacturing, 4GW inverter capacity and 20,000 MVA transformer capacity. These investments are expected to strengthen backward integration, improve operating leverage and support margin expansion over the medium term. we estimate revenue/EBITDA/PAT CAGR of 22.5%/16.4%/8.9% over FY26-29E. We maintain ‘BUY’, with TP of INR3,111 (same as earlier) valuing at 10x EV of Sep’28E EBITDA with an implying PE of 19x Sep’FY28E
Q2FY27 Financial Performance:
Revenue increase by 23.9% YoY to INR 75.1bn (PLe: INR 77.4bn). EBITDA declined by 5.9% YoY to INR 13.2bn (PLe: INR 11.7bn). EBITDA margin contracted by 560bps YoY to 17.6% (PLe: 15.1%). PBT declined by 17.3% YoY to INR 10.1bn (PLe: INR 9.0bn). PAT declined by 14.7% YoY to INR 7.1bn (PLe: INR 6.3bn). Solar PV modules grew by 22.2% YoY to INR 65.6bn and margins contracted by 610bps to 13.7%. Generation of power grew by 116% YoY to INR 160mn and margins stood at 40.7%. EPC declined by 41.4% YoY to INR 4.4bn and margins contracted by 100bps to 14.1%. EPC Transmission and Dist. stood at INR 6.0bn and margins stood at 0.4%.
Module production stood at 3.0GW vs 3.2GW in Q1FY27, while module sales were 3.0GW vs 3.6GW in Q1FY27.
Please refer disclaimer at Report
SEBI Registration number is INH000000933
