Waaree Energies (WAAREEEN IN) – Q1FY27 Result Update – Cell integration to drive structural margin expansion – BUY

Waaree Energies (WAAREEEN) reported EBITDA margin contraction of 820bps, primarily due to higher raw material costs driven by global metal price inflation, softer export mix as shipment clearances were delayed, lower non-DCR realizations due to delayed offtake following ALMM-II implementation. Management expects margins to improve going further, supported by higher captive cell production, ramp-up of the additional 1.6GW US manufacturing capacity, normalization of export shipments, and commencement of the 10GW cell facility, which will significantly improve cell-to-module integration. The company reaffirmed its FY27 operating EBITDA guidance of Rs70-77bn, supported by a order book of ~INR615bn (25.2GW), with net order inflows of ~INR160bn during the quarter. Waaree expects retail revenue to reach INR90-100bn in FY27, benefiting from better realizations and a wider distribution network. The company also reiterated that its phased Rs315bn capex program remains on track, with FY27 investments focused on scaling 10GW solar cell capacity, 2.6GW module, 4GW inverter, 20 GVA transformer and 1GW electrolyser capacity, which are expected to strengthen backward integration, improve cost competitiveness and support structural margin expansion over the medium term. We estimate revenue/EBITDA/PAT CAGR of 24.8%/21.0%/16.4% over FY26-28E. We downward revise our FY27/FY28 earnings estimates by 10.5%/1.7% considering lower module realizations and slower capacity ramp-up while FY27 eps has been adjusted for refund of reciprocal duties. We maintain ‘BUY’, with TP of INR3,280 (earlier INR3,713) valuing at 10x EV (earlier 12x) of Mar’28E EBITDA with an implying PE of 19x FY28E