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* Event: On 24th Feb’26, the US Department of Commerce announced a preliminary countervailing duty (CVD) of 126% on solar imports from India and set an initial CVD ranging 86%-143% on imports from Indonesia and 81% on shipments from Laos.

* However, the applicability of the 126% duty is contingent upon the country of origin of the solar cells used in modules supplied to the US. In effect, the 126% tariff should be applicable only if solar modules supplied to the US use solar cells manufactured in India.

* Waaree Energies (WEL), which earns roughly a third of its revenue from the US, does not use solar cells manufactured in India for its US supplies; therefore, the preliminary 126% CVD is unlikely to have a material impact on WEL’s earnings. Premier Energies (PEL) has limited exposure to exports, as roughly just 1% of its revenue comes from overseas markets. Accordingly, PEL remains insulated from these developments.

* From a broader industry perspective, India’s cell manufacturing capacity is ~27GW under ALMM-II (vs. module manufacturing capacity of 162GW as per ALMM-I) and is still in the ramp-up phase. It is primarily oriented toward meeting rising domestic demand. The current cell capacity trajectory suggests limited surplus availability to meaningfully support exports, at least until FY28.

WEL sees no earnings impact from 126% preliminary CVD by US

WEL management hosted a conference call on 25th Feb’26 and below are our key takeaways:

Non-Indian cell strategy mitigates CVD exposure for WEL

* WEL does not use India-made cells for sales in the US, so the 126% rate does not apply to the company. For US sales, WEL sources cells from countries where the tariffs are 10-15% and then modules are either manufactured and shipped from India or manufactured in WEL’s US facility.

* Since 2019, WEL has been sourcing cells from non-Chinese sources, although the company has not specified the sourcing region publicly. It continues to explore more options like the Middle East, Africa, etc. The company had majorly stopped sourcing from SE Asia sometime back; did source from Indonesia last year but has now stopped.

* No potential impact on margins expected. Even when there was a 50% tariff on India in the last 6-8 months, it was visible that nothing had changed for WEL with respect to commercial numbers.

* Management has explicitly stated that there has been no material impact on WEL’s ability to service its US order book.

* US module manufacturing capacity currently stands at 2.6GW and is expected to reach 4.2GW over the next 1-2 quarters, which will be sufficient to cater to the current US order book.

* There has been no change in capex plans due to tariffs or other external developments. ? WEL’s overseas revenue makes up one-third of total revenue, and a similar range of continued supply can be expected.

Strategic backward integration and geographic diversification

* Polysilicon will be sourced from the Oman facility, where pilot production has already begun and production can start in 2-3 months. When FEoC regulations tighten starting Apr’26, the Oman facility is expected to be highly beneficial.

* When WEL’s ingot-wafer capacity starts in India, it can continue to buy polysilicon from the FEoC-compliant market in Oman (via United Solar Holding Inc.) and manufacture ingot-wafer in India. Then cell manufacturing can either happen in the US or in the market WEL is currently sourcing cells from, and then the assembly of modules can be done in the US or India. ? The company is evaluating the possibility of setting up a cell manufacturing facility in the US, if required.

US market remains lucrative

* Annual US module consumption was around 50GW and the current pipeline data shows yearly module demand of 70-80GW for the next few years. This growth is driven by data centers and the increased usage of AI.

* The US has a total module manufacturing capacity of 50-55GW, though it does not have enough cell and wafer capacity. Accordingly, it continues to import cells from alternate markets.

* In the US, FEoC compliance is important; even polysilicon sourcing is not allowed from companies where Chinese holding is more than 30%. Apart from China, the largest cell manufacturing capacity exists in India, so as of now, India seems to be the only possible solution for the US market.

* The US market currently offers module prices of 30-31 cents/Wp. For WEL, client contracts for the current US order book were signed when module costs ranged between 35-38 cents/Wp.

* WEL has been exporting 2-3 GW of modules to the US every year on a consistent basis. The company continues to receive ongoing order inflows from US customers.

Others

* The company participates in premium and high entry-barrier markets, e.g., retail and US market, which deliver superior margins.

* There has been no change in capex plans due to tariffs or other external developments. ? Although the current order book comprises about 50-60% overseas orders, these will be fulfilled over 3-4 years, resulting in annual revenue contribution of 30-35%.

Valuation and View

* WEL: The valuation of WEL has been derived through a sum-of-the-parts (SoTP) methodology, resulting in a TP of INR3,514/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. The sum of these segment valuations (adjusting for net debt) results in a TP of INR3,514/share.

* PEL: PEL’s valuation has been derived using the SoTP methodology. The domestic module business is valued at 13x FY28E EBITDA, representing a ~25% premium to global peers. The new business segment (~63% of its contribution from battery manufacturing) is valued at 10x FY28E EBITDA. The sum of these segment valuations (adjusting for net debt) results in a TP of INR1,000/share.

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