Brokerage firm Prabhudas Lilladher has updated its target price for Waaree Energies to ₹3,280. While recent profit margins faced pressure from higher raw material costs and export delays, the company is focusing on scaling its manufacturing capacity to support long-term growth.
Prabhudas Lilladher has updated its outlook on Waaree Energies, setting a target price of ₹3,280 for the stock. This revision comes as the company navigates a period of profit margin compression. In its latest update, the brokerage noted that the company’s operating profit margin contracted by 820 basis points recently. This pressure was driven by a combination of rising global metal prices, which increased raw material costs, and logistical challenges that slowed down export shipments.
Factors Impacting Profitability
The company faced hurdles including a softer mix of export products and delayed demand following the implementation of the ALMM-II (Approved List of Models and Manufacturers) policy. These factors, combined with lower realizations on non-DCR (Domestic Content Requirement) sales, weighed on recent performance. However, the brokerage suggests that the company’s focus on vertical integration—specifically its move toward captive cell production—is expected to help stabilize and improve cost efficiencies over time.
Expansion and Order Visibility
Despite the recent margin pressures, Waaree Energies maintains its operating profit guidance for FY27, projecting figures between ₹70 billion and ₹77 billion. The company continues to benefit from a significant order book, which stands at approximately ₹615 billion, covering 25.2 GW of capacity. Net order inflows remained active, with the company securing around ₹160 billion in new orders during the most recent quarter.
To support its long-term growth, the company is progressing with a large capital spending program totaling ₹315 billion. Key projects include the scaling of a 10GW solar cell facility, the expansion of module and inverter manufacturing capacities, and entry into electrolyser production. Management expects these investments to enhance competitiveness and support retail revenue growth, which is targeted to reach ₹90 billion to ₹100 billion by FY27.
Earnings Estimates and Monitoring
Reflecting the current environment, the brokerage has adjusted its earnings estimates downward for FY27 by 10.5% and for FY28 by 1.7%. These revisions account for softer expected prices for solar modules and the potential for a slower-than-initially-planned ramp-up of new production facilities. Investors will likely track the actual timeline for these capacity expansions and whether the company can successfully navigate raw material price volatility to improve its profit margins. The progress of the 10GW cell facility and the normalization of export volumes remain critical areas to monitor for future performance updates.