Waaree Energies, India’s largest solar photovoltaic (PV) module manufacturer, has launched its IPO, opening for subscription from October 21 to October 23, with an estimated offer size of ₹4,321 crore. This includes the issuance of fresh equities worth ₹3,600 crore. The IPO is set to aid the company in expanding its production capacity and supporting its backward integration initiatives.
Expanding Footprint and Backward Integration:
Waaree Energies has positioned itself as a leader in India’s solar industry, with an installed capacity of 13.3 GW spread across Gujarat and Uttar Pradesh. The company is also making strides in the global market, establishing a 1.6 GW facility in Texas to benefit from incentives under the Inflation Reduction Act in the US. Domestically, the company is setting up a 5.4 GW solar cell manufacturing unit in Gujarat, expected to be operational by the end of the fiscal year.
Waaree is transitioning to TOPCon technology for higher efficiency in its solar modules and has a robust order book of 16.6 GW, including a 3.75 GW order for its subsidiary in the US. This will be a significant driver in taking its aggregate capacity to over 20 GW in the next 2-3 years. The company is also venturing into electrolyser manufacturing, with a 300 MW capacity under the government’s PLI scheme.
Exports and Revenue Growth:
Waaree Energies has seen exponential growth in both revenue and profitability over the last few years. Since FY21, its annual turnover has surged to over ₹11,000 crore, supported by favorable government policies and expanding manufacturing operations. In FY24 alone, the company recorded solar PV export revenues of ₹6,600 crore, emerging as the largest solar module exporter to the US.
Domestic sales also contribute significantly, with 75% of the company’s revenue derived from solar module sales. Around 20% of its revenue comes from its franchisee network catering to MSME and rooftop customers, while the remaining 5% comes from EPC and other related services.
Global Market Dynamics and Domestic Protection:
The global solar market faces oversupply challenges, especially with China dominating the sector with an 80% share in solar cell and PV module manufacturing. This has led to solar module prices falling by over 70% since early 2023, putting pressure on manufacturers worldwide. However, India’s domestic players, including Waaree, benefit from multiple layers of government protection, such as customs duties, the Approved List of Models and Manufacturers (ALMM), and the PLI scheme.
Waaree’s 12 GW capacity falls under the ALMM, giving it a market share of approximately 21%. The company is poised to further strengthen its position as the Indian government continues to promote domestic solar manufacturing.
Valuation and Recommendation:
The IPO is priced at approximately 30 times FY25 estimated earnings, which is at a discount compared to peers like Websol and Premier Energies. Despite concerns over global oversupply and competition from China, Waaree’s strong market position, expanding capacity, and financial performance make this IPO attractive for both short- and long-term investors.
Given the company’s leadership in the domestic market, growing international footprint, and robust financials, we recommend subscribing to Waaree Energies’ IPO for potential gains in the near and long term.
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