Waaree Energies (Waaree), one of India’s largest solar photovoltaic (PV) module manufacturers, reported its strongest quarterly performance yet, with revenue rising 119% year-on-year (y-o-y) to ₹7,565 crore in Q3FY25-26, backed by record module production and margin expansion. Net profit soared 116% y-o-y to ₹1,062 crore, while operating profit jumped 167% to ₹1,928 crore. Operating margins improved to 25.49% from 20.88% a year earlier, reflecting improved cost efficiencies and backward integration benefits. In 9MFY25-26, it has achieved a revenue of ₹18,057 crore and operating profit of ₹4,332 crore. In nine months, it has already made more than 25% of its FY24-25 revenue. It is near achieving its FY25-26 operating profit guidance of ₹5,000 crore - ₹6,000 crore.
Module production rose 94% y-o-y, while cell production increased 35% quarter-on-quarter (q-o-q), supported by an order-book of around ₹60,000 crore and a pipeline exceeding 100GW (gigawatt). The revenue-mix remained balanced, with 67.4% from the domestic market and the rest from overseas, while retail and engineering-procurment-construction (EPC) segments gained traction. According to the management, Waaree became the first Indian solar manufacturer to achieve over 1GW of module production in a single month, producing nearly 52 modules per minute, supported by automation and engineering excellence.
Source: Company presentation
Solar Paradox: Navigating India’s Emerging Industry Glut
India’s solar sector has reached a structural crossroads: manufacturing capacity is projected to hit 165GW, but annual installations remain capped at 45GW–50GW, creating a glut where large integrated players sustain 80%–85% utilisation, while stand-alone module-makers languish at 20%–25%. The constraint is not demand but transmission, Solar farms can be built in 12–24 months; but inter-state lines take five to seven years, leading to curtailment of 2.3TWh (terawatt-hour) in 2025, with Rajasthan alone reporting 48%–51% peak-hour losses and ₹250+ crore revenue hit and Gujarat had curtailment levels of 10%–30%. Since 2019, India has curtailed 1,408GWh (gigawatt-hour)—enough to power a small state for a year, underscoring the grid’s inability to absorb rising output. The national electricity plan earmarks US$110bn (billion) for transmission expansion from roughly 485,000 to 648,000ckm (circuit-km) and 33GW of high-voltage direct current (HVDC) links, but execution lags years behind generation growth. Inter-state transmission projects, typically, require about 30–36 months to build—and that estimate doesn’t even factor in right-of-way conflicts or land acquisition disputes which often drag out the process by several additional years. Developers like Reliance, with land banks exceeding 100GW, face connection approvals delayed to 2030+, highlighting transmission as the true rate-limiter of India’s renewable transition.
Historically, Indian manufacturers looked to US as a safety valve for excess supply. However, new US tariffs of up to 50%, which have now reduced, and ongoing anti-dumping investigations have made exports increasingly risky. As these overseas markets tighten, more supply is redirected back into the Indian domestic market, further depressing prices. Compounding this is the rising cost of raw materials. Silver accounts for roughly 25% of a solar cell’s cost and rising commodity prices are eating into the margins of manufacturers who cannot pass on these costs to consumers in an oversupplied market.
Source: Company presentation
Despite these headwinds, the management of industry leaders like Waaree remains remarkably optimistic, even labelling the overcapacity concerns as a temporary phase and a ‘myth’. They argue that exponential growth in retail demand (e.g., PM Surya Ghar Scheme), commercial and industrial (C&I) sectors and the massive power requirements of the arriving artificial intelligence (AI) data centre economy will, eventually, absorb the surplus. According to the management, to weather the cycle, Waaree is transitioning from Waaree 1.0 (modules and cells) to Waaree 2.0, building a fully integrated solar and energy transition platform across polysilicon, ingots, wafers, cells, modules, battery storage, inverters, transformers, power infrastructure and electrolysers. Chief executive officer (CEO), Amit Paithankar, stated that the requirement in India is increasing exponentially and that current production is ‘just skimming the surface’ of potential retail demand. He noted that 9MFY25-26 already saw solar additions 35GW that surpassed the previous full year additions.
To protect the company's future, Waaree is pursuing full backward integration. They are expanding into polysilicon, ingots and wafers, including a strategic investment in a polysilicon plant in Oman to ensure a non-Chinese, fully traceable supply chain. By controlling the value chain from ‘polysilicon to module’, the management believes that they can maintain margin stability even if commodity prices or export rebates fluctuate. The management is building a 20GWh advanced lithium-ion battery facility; they view battery energy storage systems (BESS) as the ‘core enabler’ of grid stability, allowing excess midday generation to be stored for evening use. The company is expanding its transformer capacity to 20,000MVA (megavolt ampere) with a planned capital expenditure (capex) of ₹192 crore and has commissioned a 3GW inverter facility. These components are described as the ‘backbone of grid expansion’, necessary to bridge the supply gap that currently slows renewable adoption. Waaree is also acting as a developer to solve land and connectivity issues, having secured connectivity for 6.1GW of projects to de-risk portfolios for global investors who lack the mandate to navigate India's complex grid-linkage processes.
In Q3FY25-26, key execution milestones include commissioning phase-1 of a 3GW inverter facility at Sarodhi (Gujarat), with phase-2 (1GW) due by FY26-27; expanding transformer capacity to 20,000MVA with ₹192 crore capex and an order-book of ₹245 crore; and progressing on a 20GWh BESS facility to be operational by FY27-28, with plans to indigenise anode, cathode and electrolyte manufacturing. It has secured a non-Chinese, fully traceable polysilicon supply chain through investment in United Solar Holdings (Oman), strengthening reliability in US and global markets. Its strategic polysilicon tie-up in Oman has reached an advanced stage with financial closure completed, off-take agreements signed and production expected to commence within the current quarter.
Waaree also signed power purchase agreements (PPAs) worth 713MW, secured connectivity of 6.1GW and tied up around 13,500 acres of land for renewable projects. In green hydrogen, the company is setting up a 1GW electrolyser facility with ₹676 crore capex, supported by a ₹444 crore production-linked incentive (PLI) , targeted for FY26-27. It continues to expand module, cell and ingot/wafer capacities on schedule for FY26-27.
According to the management, Waaree’s planned 20GWh backward-integrated BESS facility is still at an early stage, with financial projections currently directional rather than audited. The management provided indicative economics – with India BESS landed cost at around US$70–80/MWh and US pricing around US$140–150/MWh. With an estimated US$1bn investment, revenue potential could range between US$1.5bn–US$2bn, depending on market-mix.
In Q3FY24-25, the management highlighted that cell utilisation has improved materially and is now running at around 80%–81% on a daily basis compared to the earlier reported averages of 56% for the December 2024 quarter. The lower historical averages largely reflected phase-wise ramp-up during the quarter, rather than steady-state performance. Initial ramp-up challenges—typical of scaling complex cell manufacturing facilities—such as effluent system stabilisation and higher breakage rates, were encountered but have now been largely resolved. With these teething issues behind, utilisation is expected to continue ramping up sustainably. Planned upgrades to larger G12R cells (rectangular-shaped solar cell format, specifically 182.2mm x 210mm, commonly used in high-efficiency, N-type TOPCon bifacial modules) over the next three months are expected to further enhance throughput and productivity, pushing utilisation levels toward 85%–90%+, supported by higher watt-peak output per cell. The management highlighted that the reported cell capacity of 5.4GW is derived by multiplying per-cell watt-peak output by total cell volumes, rather than by cell count alone. As efficiency improves and the company transitions to larger G12R cells, watt-peak output per cell increases, improving effective capacity without proportionate increases in cell count. Current cell efficiencies are in the 24%–24.5% range and the shift to G12 formats will enhance productivity and output metrics further, reinforcing the credibility of the stated capacity numbers.
According to the management, margins are strong, underpinned by rising production volumes and operating leverage, increasing share of DCR (domestic content requirement) module and balanced exposure across domestic and international markets, particularly US. Operating leverage and manufacturing efficiencies have offset commodity volatility, enabling stable or improving margins even during cost cycles.
According to the management, the company follows a back-to-back procurement model, aligning raw materials sourcing directly with confirmed orders. This approach avoids speculative inventory exposure and significantly limits commodity risk. Procurement—whether for traceable inputs for US markets or wafers, silver, and other materials for domestic production—is tightly linked to contracted demand.
On the concerns of rising silver prices, the management explained that its silver exposure is manageable as it is less than 9% of module costs and around 25% of cell cost which makes its impact manageable. Even where commodity prices fluctuate, efficiency gains and scale benefits are expected to neutralise margin impact, over time. Module and cell pricing remains largely stable, supported by strong order-book visibility, limited near-term global capacity additions and improved manufacturing efficiencies. While increasing scale may create room for selective price adjustments, the company remains focused on balancing competitiveness with margin protection, rather than pursuing aggressive price-led growth.
According to the management, orders are treated as firm only after receipt of advances, ensuring financial discipline. Advance payments, typically, range between 5%–15% of contract value, depending on the agreement terms. For retail transactions, full payment is generally collected before shipment, reducing renegotiation and counterparty risks. Contracts follow a hybrid structure; some allow commodity cost pass-through and others place commodity risk on the company, depending on customer profile and agreement structure.
DCR vs Non-DCRmix & Captive Cell Consumption
Cell usage is largely captive, with almost all domestic cell output consumed internally for module manufacturing. Its volume-mix is around 65% exports and 35% domestic. Within the domestic market, 80%–85% of volumes are currently non-DCR, though this mix is dynamic and expected to evolve as additional cell capacities come online. Its realisation benchmarks for non-DCR modules (India) are ₹18.5/Wp (per watt.) and DCR modules are ₹23–24/Wp, reflecting the DCR premium.
US Operations and Tariff Risk
Its US operations are a key pillar of the global strategy with around 300+ MW sold and revenue from US exceeding ₹2,000 crore in Q3FY25-26. A significant driver of margin expansion in this quarter was the US market, where realisations have jumped from ¢24–25 to as high as ¢30. While US module manufacturing is operational, cell manufacturing in the US is under active evaluation, with timing dependent on market conditions. The management explained that US defines the country of origin based on where the cell is manufactured, not the module. By strategically locating cell manufacturing, they aim to keep tariffs ‘minimal’. The acquisition of Meyer Burger’s Heterojunction Technology (HJT) assets and expansion at the Texas facility significantly strengthen the US manufacturing base. In the international market, tapering of China’s export rebates has lifted global cell prices from ¢4–4.5/Wp to around ¢6/Wp, validating China’s true cost base and improving India’s relative competitiveness. Current Indian cell production cost is approximately ¢7/Wp, with scope for further reduction as scale improves.
According to the management, trade-related risks (anti-dumping investigations, tariffs) remain evolving and it is premature to comment until concrete developments emerge. However, the company created an exceptional provision of around ₹294 crore in relation to an ongoing US investigation, despite no formal demand or liability crystallising at this stage. The provision was made, based on legal advice from US counsel, reflecting a conservative and transparent accounting approach. The management emphasised that the decision was driven by prudence and governance standards, rather than any confirmed adverse outcome.
By recognising the potential exposure upfront, the company aims to avoid future earnings volatility and reinforce credibility with global customers, regulators, and investors. According to the management, this provisioning does not alter the company’s operational outlook, margin trajectory, or expansion plans in the US. Its risk mitigation strategy involves manufacturing cells in tariff-minimal geographies, expanding local manufacturing in key markets, especially US, and maintaining a diversified global supply chain, including exporting modules made with cells manufactured outside India
However, the fact that it felt compelled to provision nearly ₹300 crore for a non-existent demand suggests the legal exposure in the US market may be more severe than the ‘buoyant’ outlook suggests. If investigations intensify, this could impact their ability to claim that India is a ‘reliable alternative to China’.
It sold around 313MW of US sales and the standard ¢7 per watt peak incentive, the company should have recorded roughly ₹160 crore in incentives. They have recorded ₹80 crore. Around 275MW was produced locally during the quarter earned ¢7/Wp (7 cents per watt) under the Inflation Reduction Act incentive. The management explained that they apply the incentive only to ‘certain portions’ of the volume. Although this raises questions about whether their US-manufactured modules fully qualify for the expected subsidies or whether there are internal supply-chain issues preventing them from claiming the full benefit.
Risks
Margins remain vulnerable to fluctuations in input costs—particularly poly-silicon, wafers, solar cells, aluminium frames and glass. Solar cells, which account for nearly 50% of raw materials costs, have witnessed sharp price volatility over the past two years. While Waaree mitigates this risk through order-backed procurement and price indexation, any sharp rise in costs without pricing power could pressure profitability.
As part of its backward integration strategy, Waaree is setting up a 5.4GW solar cell manufacturing facility, funded through equity, internal accruals and term debt—which is expected to increase leverage. While the company has a proven track record in scaling up module capacity, timely and cost-effective execution of this project will be critical from a credit perspective.
Additionally, Waaree has secured 6GW of capacity under PLI scheme tranche-2 to set up a new module manufacturing unit. The project involves a capex of approximately ₹9,000 crore, also funded through a mix of equity, internal accruals and already-arranged long-term debt.
Solar modules are, typically, sold with 10-year warranties against manufacturing defects and 25-year performance guarantees. While historical warranty claims have been minimal, Waaree has made adequate provisions to cover potential future liabilities.
The solar module manufacturing industry remains intensely competitive, with Indian manufacturers facing pressure from global players. Although domestic competitiveness has improved due to import duties (25% on cells, 40% on modules) and the ALMM framework, the sector remains exposed to demand-side risks. Efforts by Indian developers to circumvent tariff barriers, along with potential adverse regulatory changes, could erode the competitiveness of domestic firms.
Valuation
Based on the company’s plans, revenues may touch ₹25,515 crore by FY25-26. The stock is trading at a market-cap-to-sales ratio (MC/sales) of 4x. Assuming its C/sales fair value comes to over ₹1,02,600 crore, implying a significant upside from the current market-cap of around ₹75,000 crore (CMP: ₹2,633). However, physical infrastructure lags years behind and can affect its growth.
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