Waaree Energies cell ramp-up and US recovery key after weak Q1 FY27

Investment View and Valuation

Anand Rathi Research’s July 30, 2026 result update on Waaree Energies retains a BUY rating, although the broker believes the investment debate has shifted from capacity creation to earnings delivery. Anand Rathi continues to favour the company for its scale, integrated manufacturing platform, diversified growth avenues, record order book and long-term structural growth drivers.

However, the broker believes sustained improvement in profitability and cash generation is necessary to justify a valuation premium. It reduced the core-module valuation multiple to 11 times from 12 times, in line with Premier Energies, and set a target price of Rs3,333.

Weak Q1 FY27 Operating Performance

Q1 FY27 operating performance was weaker than expected. Revenue grew 71 per cent year-on-year excluding a roughly Rs3.49 billion reciprocal-tariff reversal. EBITDA excluding this reversal was Rs10.9 billion, 14 per cent below Anand Rathi’s estimate and 7 per cent below consensus estimates.

Module utilisation was only 56 per cent, below the normalised level of above 70 per cent, owing to delayed project offtake amid uncertainty around ALMM-II implementation and geopolitical disruption to US shipments. Higher China-linked raw-material costs, lower module realisations, a weaker export mix and greater reliance on US merchant sales also pressured margins. The export mix declined to 22 per cent in Q1 FY27 from 32 per cent in Q1 FY26.

Merchant sourcing does not receive the IRA benefits available from captive US manufacturing. Reported Q1 FY27 revenue, EBITDA and module sales volume were as follows:

FY27 Recovery and Capacity Ramp-up

Management reiterated FY27 EBITDA guidance of Rs70 billion to Rs77 billion and expects recovery during the balance of FY27 from demand improvement, higher plant utilisation, deeper cell integration and normalisation of US shipments.

Cell utilisation improved to 67 per cent in Q1 FY27 from 57 per cent in Q4 FY26. Management expects monthly cell production to rise to about 400 MW from about 300 MW in Q1 FY27. It targets module production of 16 GW to 18 GW and cell production of 10 GW by FY28. The Gujarat 10 GW cell facility is expected to commence by December 2026.

DCR cell production is expected to rise from 800 MW in Q1 FY27 to about 1.5 GW by Q3 FY27. This is expected to enable complete integration for domestic operations and potentially support structurally higher margins.

US Manufacturing, BESS and Order Book

Commercial shipments from Waaree Energies’ US manufacturing facility are expected from Q2 FY27. Management expects locally made US modules to earn an operating margin of about 7 cents per watt, compared with 4 cents to 5 cents per watt from exports, aided by IRA incentives and lower structural costs.

The company also expects commercial BESS supplies from Q2 FY27. Its 5.15 GWh container facility is operational, with a 16 GWh Phase II expansion planned for FY29.

The order book stands at a record Rs615 billion, or 25.2 GW, excluding retail, with about 40 per cent from the domestic market. Management stated that order inflows improved after tariff-related uncertainty temporarily slowed orders.

Capex Plans and Earnings Estimates

Planned capex through FY29 is Rs315 billion, of which Rs94.5 billion had been incurred. The remaining spend is planned across FY27 to FY29 in a 30:40:30 distribution.

Anand Rathi reduced FY27 and FY28 revenue estimates by 12.3 per cent and 6.9 per cent, respectively, principally because of weaker expected overseas performance. It cut EBITDA estimates by 9.0 per cent and 8.2 per cent to Rs68,529 million and Rs83,459 million, while increasing expected DCR module contribution as cell production ramps up.

Key Risks

• Delays in commissioning announced capacity.
• Low utilisation at new manufacturing facilities.
• Softer exports.