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We initiate coverage on Waaree Energies with BUY and Mar-27E TP of Rs4,260 (48% upside), valuing the core PV business at 14x Mar-28E EV/EBITDA. India’s solar manufacturing development has been supported by favorable regulations like ALMM, BCD, and DCR and, despite the module overcapacity now, integration of cell and wafer-ingots as well as the upcoming ALMMs on them should support first movers like Waaree, driving their competitiveness. The profit pool will shift from module to cell and to wafer-ingot, but book margins and returns are likely to stay protected. FY25-28E revenue/EBITDA/APAT CAGR is 36%/48%/40%, on the back of major integrated expansions in FY26-27 leading to 33% module volume CAGR and a largely stable EBITDAM at 23-24%. Waaree is further diversifying into BESS, transformers, inverters, and electrolyzers, besides its already established EPC and O&M presence – this allows it a higher wallet share with customers. We build in BESS capex for 3.5GWh albeit no earnings in FY28E, valuing it at 1x EV/invested capital of Rs20.7bn.

ALMMs to protect integrated players; Waaree’s order book secured for 2-3 years Installed solar power capacity CAGR in India is expected at ~30GWac on average in FY26- 28E, given GoI target of ~300GWac by CY30 (200GW by end-FY28E vs 106GW at endFY25). This implies module-cell demand of >45GWdc pa on average, at 1.4x loading. India’s module capacity surpassed 70GW in FY25; it is expected to reach ~200GW by FY28. However, with ALMM II (cell) and the consequent DCR requirement, installed cell capacity would be crucial; per our industry checks, cell capacity would be at 40/60/80GW as of end-FY26/27/28. Annual capacity utilization of 85% implies ~50GW of domestic cell production, albeit difficult to achieve at the industry level. Waaree’s core order-book, estimated at ~Rs440bn (at end-Q2FY26), provides secured revenue till mid-FY28E, even after building in the rapid growth. Beyond FY28, the proposed ALMM-III (wafer-ingot) should set in, with FY30 capacity likely at ~60GW, thus protecting integrated player

Integration to support business margins; major capacity expansion underway Waaree is expanding its module capacity from 18.7GWpa as of end-Q2 to 26.7GW by end-FY26, cell capacity from 5.4GW to 15.4GW by end-FY27, and setting up new waferingot capacity of 10GW by end-FY27, at total capex of Rs118bn. 6GW of integrated capacity is under the PLI scheme. While module-cell integration is likely to expand margin by ~3% (all things remaining the same), wafer-ingot could add another 1-2% (in our view), not adjusting the capacity utilization difference, which provides further upside. Cell ALMM wef Jun-26 would also increase DCR share, wherein margin is 5-6% higher than Waaree’s blended rate. The mgmt has given guidance for 22-24% sustainable EBITDAM, which we believe is reasonable even after keeping some cushion from the rising domestic capacities and the near-term US-based uncertainties.

We initiate coverage on Waaree with BUY and TP of Rs4,260 Our TP estimate is basis SOTP valuation, with core target EV/EBITDA of 14x FY28E and BESS at 1.0x EV/invested capital. Key risks: competitive, technology, policy, commodity.

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