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Waaree Energies Ltd
| Q3 & 9M FY-26 Earnings Conference Call
Summary : Waaree Energies reported a stellar quarter with record growth, driven by strong order books and strategic expansion into a fully integrated energy transition platform, despite some market uncertainties.
Management Perspective positive : Waaree has delivered yet another stellar quarter with record-breaking numbers. The future looks good. We look forward to continuing this momentum.
Concall Report Analysis & Insights
Business Overview
- Reported stellar Q3 FY26 with 118.8% YoY revenue growth and 167.2% YoY EBITDA growth.
- Achieved 1 gigawatt of module production in a single month, producing 52 modules per minute.
- Secured a robust order book of ~Rs. 60,000 crores with a pipeline exceeding 100 gigawatts.
- Maintained a balanced geographical revenue mix, with 67.4% from the domestic market.
- Expanded product portfolio across distribution, inverter duty, and extra high-voltage transformers.
Future Growth Prospects
- Investing in full solar value chain (polysilicon, ingots, wafers, cells, modules) as 'Waaree 2.0'.
- Expanding into battery storage, inverters, transformers, power infrastructure, and electrolysers.
- Commissioned phase one of a 3-gigawatt inverter facility, with phase two operational by FY27.
- Building a 20-gigawatt-hour battery energy storage system facility by FY28.
- Setting up a 1 gigawatt electrolyser facility, expected to be operational by FY27.
Management Insights
- Delivered another record-breaking quarter, reflecting strong strategy and execution.
- Achieved highest-ever quarterly module production of 3.5 gigawatts and record EBITDA.
- Expressed confidence in surpassing FY26 EBITDA guidance of Rs. 5,500 to Rs. 6,000 crores.
- Emphasized structural stability of margins due to production improvements and DCR content increase.
- Committed to transparency and abiding by laws in all operating countries.
Signs of Skepticism
- Initial discrepancy in cell utilization rate (56% for quarter vs. 80% daily rate).
- Lack of specific EBITDA growth guidance for FY27, deemed premature.
- Unclear split of US revenue between local manufacturing and exports from India.
- Partial application of IRA incentives, not on full volume, causing a disconnect in recorded amounts.
- Uncertainty regarding equipment availability for ingot & wafer manufacturing from non-Chinese sources.
Risk Factors
- Uncertainty regarding anti-dumping duty cases in various regions.
- Potential for commodity price fluctuations impacting gross margins.
- Delays in PPA signings and bureaucratic hurdles in the Indian market.
- Technical and geographical limitations affecting transmission capacity and land availability.
- Evolving tariff situations in international markets, requiring continuous monitoring.
Good To Know
- Secured non-Chinese fully traceable polysilicon supply chain through investment in United Solar Holdings (Oman).
- Raised Rs. 1,000 crores of equity for advanced lithium-ion battery and pack manufacturing facility.
- Recognized as a Tier-1 PV module maker for the 39th consecutive quarter.
- Progressing towards net zero Scope 1 and Scope 2 emissions by 2030, and Scope 3 by 2040.
- Provisioned Rs. 294 crores for US investigation based on legal advice.
Key Drivers
- Record order book ensures future revenue.
- Integrated value chain (Waaree 2.0) diversifies growth.
- Strong government policy supports solar industry.
- US market expansion drives higher realizations.
Key Analyst Discussions
Competitive Environment
- Questions regarding the impact of anti-dumping duty cases in Indonesia, India, and Laos.
- Inquiries about potential pricing pressure from new capacities or DCR tying up of cells.
- Discussion on China's export rebates tapering off and its impact on global cell prices.
- Questions about the cost of cell production in India and silver's percentage contribution.
- Inquiries about the availability of crystal ingot pullers and alternate sourcing plans.
Market Trends & Consumer Behavior
- Questions about the outlook for the solar industry and government policy support.
- Discussion on the reasons for PPAs not getting signed in India (demand vs. bureaucratic).
- Inquiries about the expected requirement of modules and cells in India by FY29-FY30.
- Management's view on overcapacity concerns in the industry.
- Expectation of exponential growth in retail and C&I solar demand.
Financial Highlights
- Questions on cell utilization trajectory and plans for upgrades to G12R cells.
- Inquiries about gross margin stability amidst rising commodity prices like silver.
- Clarification on IRA tax credits received for module manufacturing in the US.
- Details on the split of the Rs. 60,000 crores order book between domestic/overseas and modules/cells.
- Discussion on the significant increase in realization from US orders, reaching ¢28-¢30 per watt-peak.
Product Composition
- Questions on the split of domestic orders between DCR and non-DCR modules.
- Clarification on the definition of 5.4 gigawatts cell capacity in watt peak levels.
- Inquiries about the current realizations for non-DCR and DCR modules.
- Discussion on the changing mix of business, moving away from gigawatt-only measurements.
- Explanation of how US orders contribute to the changing product mix and higher realizations.
Strategic Considerations
- Questions on the timeline for polysilicon production from the Oman tie-up.
- Inquiries about the broad economics, revenue potential, and payback of battery manufacturing.
- Discussion on plans for cell manufacturing expansion in the US.
- Understanding the business model for renewable power infrastructure and EPC services.
- Questions about Waaree's strategy to manage commodity risks through back-to-back cell tying.