Waaree Energies charged up on strong solar demand, but tariff concerns persist
Waaree’s order book has 25GW of projects worth ₹49,000 crore, or about 3.2 times trailing-12-months revenue. Still, the 50% US tariff could hurt profitability as many of its contracts lack a cost-escalation clause.
Waaree Energies Ltd's stock has been in focus lately owing to the company's offer to sell its 14.66% stake in Indosolar Ltd to comply with minimum public shareholding rules. Waaree acquired the Indosolar stake through an insolvency resolution in 2022.
Indosolar's turnaround reflects the strong momentum in Waaree’s core business of solar cell and module manufacturing, as well as its operational capabilities. Yet, Waaree faces significant risks from policy uncertainties in the US, its main market after India, contributing nearly one-third of revenue.
The sector’s momentum is reflected in Waaree’s order book, which has 25 GW of projects worth ₹49,000 crore, or about 3.2 times trailing-12-months revenue. An order pipeline of over 100GW bolsters the robust outlook.
Capex season
Waaree is undertaking significant capital expenditure (capex) across the entire value chain of silicon ingots, wafers, cells and modules to tap demand. It is setting up a 6GW integrated facility backed by the government's production-linked incentive (PLI) scheme, and plans to expand it by 4GW by FY27 without subsidies.
Its 5.4GW cell manufacturing plant, commissioned at the end of March, is expected to achieve 80% capacity utilization in the ongoing quarter (Q2FY26) after a full ramp-up. Waaree’s total capacity for modules, cells and ingot wafers is expected to touch 26GW, 15.4GW, and 10GW by FY27, from the current 15GW, 5.4GW, and nil, respectively.
Besides the solar eco-system, projects in adjacent areas such as battery energy storage systems (BESS), green hydrogen and electrolyzers are also expected to be commissioned in FY27. It augurs well that BESS, which is essential for storing excess solar power, is seeing a notable price decline thanks to lower lithium prices, management said.
Waaree’s overall capex for the next two years is about ₹15,000 crore. With a cash balance of more than ₹7,500 crore and projected internal accruals, the balance sheet should remain healthy.
The ramp-up of the cell manufacturing plant should aid profitability. The company has guided for Ebitda of ₹5,500-6,000 crore (including other income) in FY26, which translates to 80-90% year-on-year growth. For Q1FY26, Ebitda jumped 80% to ₹1,000 crore, aided by a 10-percentage-point improvement in gross margin.
Tariff concerns
Still, the 50% US tariff on imports from India could hurt profitability as many of Waaree’s contracts lack a cost-escalation clause. On the positive side, it is expected to benefit from US President Donald Trump's One Big, Beautiful Bill, passed in July, which restricts tax benefits for imports from certain countries, including China, under the foreign entity of concern (FEoC) clause. For now, the US market remains strong, with the company securing 2.23GW of new orders in Q1FY26. Its US facility, which commissioned its first module manufacturing plant of 1.6GW in January, is expected to double it in next six to nine months.
Waaree Energies’ stock is up almost 90% from a low of ₹1,863 on 7 April. It trades at an enterprise value of 18.7 times estimated FY26 Ebitda, according to Bloomberg data. The signing of the India-US trade pact could be a key trigger for the stock.
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