Waaree Energies: Low debt, backward integration plans make Waaree a long-term opportunity

The company operates on a negligible net debt. It is currently in the process of backward integration, which is expected to improve the availability of inputs. It also plans to raise the capacity of solar panels in the future. These initiatives are expected to help the company stay ahead of competition. Given these factors, the company looks well positioned to take advantage of the fast-evolving landscape of renewables energy in the country. Investors may consider the IPO with a long-term horizon.

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Mumbai-headquartered company commenced operations in 2007. As of June 2024, it had 12 gigwatts (GW) of aggregate installed capacity compared with 4 GW in FY22. It manufactures a variety of PV modules including mono and multi-crystalline, and tunnel oxide passivated contact (TopCon) modules. It has four manufacturing facilities spread across Gujarat and one in Uttar Pradesh. Its customers include utilities, enterprises and the retail segment. The contribution of exports in revenue increased to 57.6% in FY24 from 23% in FY22.The company is in the process of implementing backward integration by setting up capacities for solar cells, and ingot wafers. By FY27, capacities of PV module, solar cell and ingot wafers are expected to be 20.9 GW, 11.4 GW and 6 GW, respectively. Backward integration will help in reducing the dependence on imports of inputs. At the end of June 2024, the company had a pending order book of 16.6 GW of PV modules and 3.8 GW for its American subsidiary. Financials
Revenue rose to ₹11,397.6 crore from ₹2,854.3 crore between FY22 and FY24 while net profit shot up to ₹1,274.4 crore from ₹79.7 crore. The operating margin before depreciation and amortisation (Ebitda margin) doubled to 15.6% while return on equity improved to 30.3% from 17.7% during the period.Valuation
Considering the annualised net profit in the June 2024 quarter, the company demands a forward price-earnings (P/E) multiple of 26.9. Another solar panel manufacturer, Premier Energies, which was listed on September 03, trades at a forward P/E of 62.3.