Whalesbook
Q4 Earnings Hit by Margin Squeeze
Waaree Energies saw its Q4 FY26 consolidated EBITDA and Adjusted Profit After Tax (APAT) fall short of analyst expectations by 11% and 4%, respectively. Gross Profit Margin (GPM) and EBITDAM decreased by 12% and 7% sequentially. This pressure came from higher logistics costs due to Middle East conflicts, shifts in overseas sales, and rising prices for silver and copper. The company prioritized module production over its own cell manufacturing, leading to greater reliance on costlier external cells. Module and cell utilization rates were 66% and 53% against capacities of 25.8 GW and 5.4 GW. Module production rose 20% from the previous quarter. Waaree also noted a worsening working capital cycle, with inventory days increasing significantly. Trading volumes surged on April 30, 2026, as the stock price reacted, declining by approximately 10-11% following the results.
Valuation Amidst Rivals
With a market capitalization around ₹90,000 crore and a Price-to-Earnings (P/E) ratio of 24-27, Waaree Energies is a key player in India's expanding renewable energy sector. As India's largest solar module manufacturer, it holds about 18.7 GW of module capacity and a substantial ₹53,000 crore order book. Competitors include Adani Green Energy, valued much higher with a market cap near ₹200,000 crore and a P/E over 120. Tata Power, which is diversified, has a market cap around ₹142,000 crore and a P/E in the mid-30s. Sterling and Wilson Renewable Energy faces profitability issues, indicated by negative P/E ratios, and has a market cap of about ₹5,000 crore. Waaree's valuation suggests investors recognize its manufacturing leadership and growth prospects, though its P/E is lower than high-growth peers like Adani Green.
Growth Faces Execution Risks
Despite ambitious growth forecasts, Waaree Energies faces significant risks. The company's planned Rs 300 billion in capital expenditure, alongside plans to raise up to Rs 100 billion, indicates high capital needs for its energy transition roadmap. Executing these plans involves potential cost overruns and delays, especially as it adopts new manufacturing lines and G12R formats. Additionally, ongoing legal challenges, such as arbitration with Enel Green Power Development S.R.L., and past GST issues add layers of operational and financial uncertainty. The strain on working capital and reliance on expensive external cells observed in Q4 highlight the challenge of maintaining efficiency as the company scales rapidly.
Future Outlook and Analyst View
Waaree management expects FY27 EBITDA to be between Rs 70-77 billion, representing 18-30% year-on-year growth. This forecast relies on commissioning 10 GW of new cell capacity in the second half of FY27 and transitioning to G12R lines. The company aims to address a USD 4 trillion Total Addressable Market (TAM) by 2035 with its integrated energy transition offerings. Emkay Global Financial maintains a 'BUY' rating with a price target of Rs 4,260. Other analysts note strong revenue and profit growth but also acknowledge the recent margin pressures. India's renewable energy sector is projected to add over 32 GW in FY2026, driven by government policies and demand, creating a favorable, albeit competitive, market for Waaree.