Waaree Renewables, an SME stock listed on the BSE SME platform, soared over 66,000% in the last five years. In the last one year period, the shares have jumped over 500%.
Operating under Waaree Energies looking after the solar EPC sector, Waaree Renewables is at the crossroads of India’s ambitious renewable energy goals, specifically in solar energy. Established in 1999, it focuses on power generation through renewable sources, primarily solar power.
The company has a robust order book of Rs 3,200 crore with 2.3 gigawatt (GW) unexecuted pipeline. Its portfolio covers various types of solar installations, such as ground-mounted solar, rooftop solar, and floating solar systems.
The stunning rally in Waaree Renewables coincided with the robust financial performance of the company in the last few years. A loss making company in FY21, the company quickly scripted a turnaround by posting profits in the next three fiscal years.
During FY22-24, the net profit grew at a compound annual growth rate (CAGR) of 308% to Rs 148 crore. Revenues during the same period clocked a CAGR growth of 144%. The bottom line improved further in the first quarter of FY25 with a three-fold rise in profit after tax.Given the rise to the top, valuations caught up, resulting in the decline of share price of Waaree Renewables in the last six months, falling around 36%. However, analysts are positive on the stock in the near term.
“Waaree Renewables has touched its trendline support at 1495, indicating signs of a potential reversal. With strong buying seen at lower levels, the stock has the potential to reach 2000 and 2050 in the near term. However, a strict stop loss of 1450 should be maintained to manage downside risk,” said Riyank Arora, Technical Analyst at Mehta Equities.
Will parent Waaree Energies replicate the success story?
As a market leader in solar PV module manufacturing, Waaree Energies generated a significant buzz in the market ever since it announced the launch of IPO. The issue, which received a subscription of 76 times, bagged highest applications (97 lakh) for any IPO in India’s primary market history.
If grey market trends are to be believed, Waaree Energies is all set to deliver multibagger returns to investors on listing. Not just the listing day blitz, analysts are extremely bullish on the long term growth story with solar energy emerging as a key global theme in the transition to renewable energy.
Waaree Energies is best placed to capitalize on the growing opportunity given its leading market share and strong financials. The company is also India’s largest exporter of solar modules, commanding a 44% share of the domestic export market in this sector.
The company boasts an order book of 13.3 gW, driven by a 6x increase in its capacity from 2 gW in FY21. In addition to this, part of the IPO funds will be used for setting up an additional 6 gW facility in Odisha, which will further its plans to expand capacity to 20.9 gW by FY27.
“The domestic market offers significant opportunities for WEL, as India actively promotes locally manufactured modules over cheaper imports from China. In response, several domestic players are expanding their production capacity to capture a share of this growing market. Waaree is at the forefront of this expansion,” said Monarch Networth Capital.
In a sector characterized by huge capex requirements, Waaree Energies has been a standout player (even among global players) with low debt levels, but at the same time, delivering the best financial performance among peers.
The company’s debt-to-equity at 0.08x is significantly lower to Vikram Solar D/E at 1.8x, Websol Energy at 1.7x and Premier Energies at 2.3x as of FY24.
Waaree delivered a three-year revenue CAGR of 80% between FY21-24, with an EBITDA CAGR growth of 154% in the same period. In comparison, Vikram Solar and Premier Energy had a revenue CAGR of 16% and 65%, respectively. The company also leads the global players Trina Solar, JA Solar and Canadian Solar in both revenue and EBITDA growth rates.
“Waaree is approximately twice the size of its nearest competitor. With its ambitious expansion plans, both in India and the US, along with the goal of achieving full integration across its operations, the company is well-positioned for sustained growth,” said CanaraBank Securities.
However, there are some risks that could hinder Waaree’s growth story. One of the major concerns is related to export seizures in the US due to labour violations, which could affect the company’s supply chain. It also faces the risk of fluctuating raw material tariffs as the company is heavily dependent on solar cell imports from China and other South East Asia jurisdictions.
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