Buy Waaree Energies Ltd for the Target Rs 3,825 by Motilal Oswal Financial Services Ltd
Execution momentum and industry tailwinds support growth trajectory
* Waaree Energies (WEL) remains well-positioned to benefit from the structural transformation that is underway in India’s solar ecosystem, supported by strong demand visibility. The key highlights include:
* C&I, rooftop, and PM-KUSUM now account for over 50% of the annual solar installations: As adoption across C&I, rooftop solar, and PM-KUSUM segments accelerates to contribute more than 50% of annual demand (~24–28GW from FY27), utility-scale solar installations (where bidding has experienced a slowdown) now account for less than 50%.
* ~100GW integrated solar manufacturing capacity required: We estimate that to adequately meet annual solar module demand, the industry would require at least 100GW of integrated solar manufacturing capacity, compared with the current ALMM-II cell manufacturing capacity of 30GW.
* Current announced ingot-wafer capacity trailing annual requirement: The announced domestic ingot-wafer capacity additions (ex-RIL) currently stand at ~50-60GW, significantly below the estimated ~100GW manufacturing requirement, indicating persistent supply-side constraints.
* Capacity expansion on track: WEL’s capacity expansion plans remain on track, with 10GW of domestic cell capacity and 2.6GW of module capacity in the US scheduled for commissioning in 2HFY27. WEL’s diversified business model, supported by a strong retail and overseas presence (~54% of FY26 sales mix), provides an advantage over peers.
* An ambitious INR1t revenue target by 2030, with 39% implied CAGR: WEL has outlined a revenue target of INR1,000b by 2030, implying ~4x growth over FY26 revenue, translating into a CAGR of ~39% over FY26–30.
* We reiterate our BUY rating with a TP of INR3,825.
Estimate ~100 GW of DCR-compliant solar module demand annually
* According to the Central Electricity Authority (CEA)’s Long-Term Resource Adequacy Plan (FY27-FY36; link), issued in Mar’26, India is expected to install ~35GW of solar AC capacity annually.
* India’s installed power generation capacity stood at 533GW at FY26 end. Assuming annual power demand growth of ~5%, the country would require ~27GW of incremental capacity additions annually.
* Assuming ~80% of the incremental capacity requirement will be met through renewable energy, this translates into ~21GW annual renewable generation demand. Further, assuming 70% of this 21GW is met through solar, annual incremental domestic content-compliant solar demand is expected to reach ~15GW. Considering an average solar plant load factor (PLF) of 24%, the corresponding annual solar capacity addition requirement works out to ~62GW (AC) or 87 GW (DC).
* Assuming a capacity utilization factor (CUF) of ~85%, the industry would need at least 100GW of manufacturing capacity
Valuation and view
* The valuation of WEL has been derived through a sum-of-the-parts (SoTP) methodology, resulting in a TP of INR3,825/share.
* The domestic module business is valued at 13x FY28E EBITDA. The US module business is valued at 12x FY28E EBITDA, which is in line with global peers. The new business segment, valued at 10x FY28E EBITDA, is consistent with domestic peer valuations.
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