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Websol Energy Limited Delivered Strong financial and operational performance in Q1 FY26, driven by strong domestic demand for high-efficiency solar cells and modules, continued operational efficiency, and capacity utilization of over 90% in its existing production line. The company is on track with its Phase II expansion, which will double cell manufacturing capacity to 1.2 GW by October 2025, funded entirely through internal accruals. Based on our revised estimates and valuing the company at 30x FY26E EPS, we arrive at a target price of Rs.1,838, implying an upside potential of 29% from current levels.

Investment Rationale:

Capacity Expansion

• Phase II (600 MW Mono PERC cell line) nearing completion; trial production expected in September 2025, with commercial start in October 2025.

• Post-expansion, total solar cell manufacturing capacity will reach 1.2 GW.

• Expansion fully funded from internal accruals, highlighting strong cash generation capability.

• Over 90% utilization of existing cell manufacturing line in Q1 FY26.

Expanding the Solar Footprint

• Launch of solar kits targeting the domestic retail and rural market.

• Advanced negotiations with large national and regional players for supply contracts tied to PM-KUSUM and DCR mandates

Solar Landscape

• India targeting 280 GW solar capacity by 2030, backed by policy incentives and domestic content requirements.

• Strong demand outlook for high-efficiency modules, particularly Mono PERC technology.

No U.S. Export Exposure

Websol Energy Limited does not export its solar cells or modules to the United States. As a result, the company faces no direct business risk from U.S. trade tariffs, anti-dumping duties, or other policy changes affecting solar imports. This insulation provides greater stability in revenue streams and shields operations from geopolitical volatility in that market.

Positive Drivers:

• Expansion to deliver meaningful revenue contribution from Q3 FY26.

• Supportive government policies, including Anti-Dumping Duty (ADD) and Basic Customs Duty (BCD), encouraging domestic solar manufacturing growth.

• Focus on innovation, R&D, and process optimization to enhance product efficiency and cost competitiveness.

• Long-term vision to serve both domestic demand and emerging export opportunities.

• Current capacity: 600 MW cells, 550 MW modules. • Customers: Module manufacturers for domestic DCR compliance, direct domestic and international module sales.

Valuation & Outlook

We maintain our BUY rating on Websol Energy Limited, reflecting confidence in the company's Strong earnings momentum, expanding capacity, and favourable policy tailwinds. With the Phase II expansion poised to double solar cell capacity to 1.2 GW and contribute meaningfully from Q3 FY26, we see sustained revenue growth and healthy margins ahead. Based on our revised estimates and valuing the company at 30x FY26E EPS, we arrive at a target price of Rs.1,838, implying an upside potential of 29% from current levels.

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