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Cell integration to drive structural margin expansion

Waaree Energies (WAAREEEN) reported EBITDA margin contraction of 820bps, primarily due to higher raw material costs driven by global metal price inflation, softer export mix as shipment clearances were delayed, lower non-DCR realizations due to delayed offtake following ALMM-II implementation. Management expects margins to improve going further, supported by higher captive cell production, ramp-up of the additional 1.6GW US manufacturing capacity, normalization of export shipments, and commencement of the 10GW cell facility, which will significantly improve cell-tomodule integration. The company reaffirmed its FY27 operating EBITDA guidance of Rs70-77bn, supported by a order book of ~INR615bn (25.2GW), with net order inflows of ~INR160bn during the quarter. Waaree expects retail revenue to reach INR90-100bn in FY27, benefiting from better realizations and a wider distribution network. The company also reiterated that its phased Rs315bn capex program remains on track, with FY27 investments focused on scaling 10GW solar cell capacity, 2.6GW module, 4GW inverter, 20 GVA transformer and 1GW electrolyser capacity, which are expected to strengthen backward integration, improve cost competitiveness and support structural margin expansion over the medium term. We estimate revenue/EBITDA/PAT CAGR of 24.8%/21.0%/16.4% over FY26-28E. We downward revise our FY27/FY28 earnings estimates by 10.5%/1.7% considering lower module realizations and slower capacity ramp-up while FY27 eps has been adjusted for refund of reciprocal duties. We maintain ‘BUY’, with TP of INR3,280 (earlier INR3,713) valuing at 10x EV (earlier 12x) of Mar’28E EBITDA with an implying PE of 19x FY28E

Q1FY27 Financial Performance: Revenue increase by 71.3% YoY to INR 75.8bn (PLe: INR 80.8bn). EBITDA increased by 9.4% YoY to INR 10.9bn (PLe: INR 14.9bn). EBITDA margin contracted by 820bps YoY to 14.4% (PLe: 18.5%). PBT declined by 8.7% YoY to INR 8.6bn (PLe: INR 12.8bn). PAT increased by 14.1% YoY to INR 8.5bn (PLe: INR 9.1bn). Solar PV modules grew by 82.1% YoY to INR 70.5bn and margins contracted by 950bps to 9.3%. Generation of power declined by 11.2% YoY to INR 99mn and margins stood at 58.2%. EPC grew by 55.1% YoY to INR 9.1bn and margins contracted by 230bps to 13.4%.

Module production stood at 3.2GW vs 4.2GW in Q4FY26, while module sales were 3.6GW vs 4.1GW in Q4FY26.

Revenue mix for Q1FY27: 39.7% Utility/IPP/C&I, 30.2% Retail, 21.2% overseas, 8.9% EPC. Order book increased to INR 615bn from INR 527bn in Q4FY26

Conference Call Highlights

• Company has reiterated FY27 EBITDA guidance of INR70-77bn

• The company guided for FY27 retail revenue of INR90-100bn.

• Order book increased to a ~INR615bn from ~INR527bn in Q4FY26, driven by ~INR160bn of fresh order inflows during Q1FY27.

• The company has planned total capex of ~INR315bn, of which ~INR95bn has been deployed as of Jun'26, while the balance ~INR220bn will be deployed over FY27-29 (30% in FY27, 40% in FY28 and 30% in FY29).

• Total manufacturing capacity is expected to reach ~28GW of modules, ~15.4GW of cells, 4GW inverter capacity, 1GW electrolyser and 20 GVA transformer capacity by FY27.

• The company expects ~10GW of cell production and ~16-18GW of module production in FY28

• The company expects to commission its 10GW cell manufacturing facility over the next six months, with all equipment already at the plant.

• The additional 1.6GW US manufacturing capacity is expected to commence commercial production from Q2FY27.

• Waaree added 3GW of module manufacturing capacity at its Samakhiali, Gujarat facility in Apr'26.

• The company commenced commercial production of 17.6MVA transformers in Q1FY27.

• USA module capacity utilisation is expected to improve to ~75-80% over the coming quarters.

• Cell production is expected to reach ~1.2GW in Q2FY27 and ~1.5GW in Q3FY27, while module capacity utilisation is guided to improve to ~70-75% by Q3/Q4FY27.

• DCR sales stood at ~800MW in Q1FY27.

• Module realisations stood at ~24-25 cents/Wp for DCR, ~13-14 cents/Wp for non-DCR and ~25-26 cents/W for exports; export business generated ~4-5 cents/Wp EBITDA.

• Management indicated imported cell prices of ~4-4.5 cents/Wp, domestic cell manufacturing cost of ~7-8 cents/Wp and DCR cell realizations of ~12-13 cents/Wp

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