Ace investor Madhusudan Kela picks stake in India’s largest solar module manufacturer

Ace investor Madhusudan Kela has added stake in the company in the December 2024 quarter. Waaree has now become one of his largest positions.

So, why exactly did the prominent investor buy stake in this solar company?

And what efforts is the company taking to grow over the medium term?

Let's find out all this in this article.

Who is Madhusudan Kela?

Known for his ability to  identify quality companies with strong growth prospects, Madhusudan Kela is one of the most well-known and seasoned investors in the Indian stock market, with extensive experience of over 27 years.

He prefers a value investing style and has a long-term investment horizon.

Why Did Madhusudan Kela Buy Waaree Energies?

Every quarter, listed companies have to report the names of shareholders who hold a 1% stake or above.

Madhusudan Kela had no prior stake and if he did, it would be less than 1% as his name did not emerge on the shareholders list.

As of December 2024, his stake is above 1% now, 1.16% to be precise, worth ₹7.3 billion as of 12 February 2025.

While the exact reason behind this ace investor's decision to buy the stock remains unknown, here's what we believe might have influenced the move.

#1 Strong Growth Prospects for Solar Manufacturing

As India's largest solar module manufacturer, Waaree Energies boasts a robust 12 GW production capacity, supported by four advanced manufacturing facilities.

The company provides a diverse range of solar solutions, including modules, inverters, batteries, and rooftop solar systems.

Waaree specialises in manufacturing solar PV modules using multi-crystalline and monocrystalline cell technologies, along with innovations such as Tunnel Oxide Passivated Contact (TopCon).

Additionally, it produces semi-flexible solar panels for global customers, catering to a wide market through direct enterprise sales.

As a vertically integrated player, Waaree further strengthened its manufacturing capabilities by acquiring Indo Solar, adding 5.4 GW to its capacity.

This positions Waaree Energies' as a key solar cell player, given its growing production capacity and technological advancements.

#2 Strong Order Book

As of December 2024, Waaree has an order book of 26.5 gigawatts, equivalent to approximately ₹500 bn.

This order book is diversified with 54% from overseas markets and 46% from India.

While there have been talks of a negative impact on solar stocks like Waaree, given Trump’s tariffs and policies, the company looks in a good spot.

The company’s US factory has commenced commercial in January 2025.

While its cell factory pilot production is underway with full-scale production expected soon.

#3 Strong Financials

Waaree Energies boasts a strong financial track record, delivering an impressive sales and profit compounded annual growth rate (CAGR) of 48% and 73%, over the past 5 years.

This is on account of continuous efficiency improvements, improved productivity, and cost rationalisation.

The RoE and RoCE also averaged 20.8% and 30.5% in the last five years. 

In the second quarter of FY25, Waaree reported flat revenues of ₹3,570 crore while its net profit rose 17% to ₹380 crore.

This was followed by a much better Q3. During the third quarter, Waaree recorded revenues of ₹3,550 crore, a growth of 115% year-on-year. Its profit came at ₹510 crore, growing 260% year-on-year.

Going forward, Waaree Energies is planning to aggressively enhance its capacity. It plans to establish a solar PV module manufacturing facility in Houston, Texas, initially set for 1.6 GW, with the potential to scale up to 3 GW by FY26 and 5 GW by FY27, depending on market conditions.

What Next?

In its latest earnings call, Waaree Energies has highlighted some massive investments in multiple segments.

To name a few -

-Green hydrogen and electrolyser business: ₹550 crore.

-Battery business: ₹2,070 crore.

-Renewable power infrastructure: ₹650 crore.

-Inverter business: ₹130 crore.

-Acquisition of Enel Green Power India.

While all this is rosy, one must remember that Indian renewable energy firms with operations in the US or exporting to the US will have to adjust to the new reality by finding alternate markets or by focusing more on the Indian market.

Investors should also take note of the intensive competition in the industry.

Waaree Energies faces competition from leading companies such as Tata Power Solar Systems, Vikram Solar, and Adani Mundra Solar. These companies are prominent players in the renewable energy sector.

There's also competition from Chinese imports. The company also sources some raw materials from China, which means that potential import restrictions or tariffs could adversely affect expansion plans.

Finally, investors should evaluate corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

How Waaree Energies Share Price has Performed Recently

Waaree Energies' share price has fallen 5% in the past five days and 11% in a month.

Waaree Energies has a 52-week high of ₹3,741 touched on 6 November 2024 and a 52-week low of ₹2,030 touched on 27 January 2025.

Since listing, the stock is down 6%. 

 

Here’s a table comparing Waaree with its peers –

 

For more details, check out Waaree Energies’ financial factsheet.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com