Waaree Energies Share Price, Analysis and Financials

Waaree Energies was founded back in 1990. It was on a mission to provide sustainable, and cost-effective energy to a world focused on reducing carbon footprints. It started operations in 2007 and now, it has the largest aggregate installed capacity of 12 GW of solar PV modules and a ~21% market share. 

Waaree Energies listed recently via IPO with 66% listing gain. It is also present in BSE IPO Index. 

This growth reflects a strong commitment to advancing the renewable energy sector, especially solar power, which is expected to play a huge role in India's energy transition. But how did this company reach such heights? Let's see. 

Waaree Energies Business Model

Understanding WEL's business model will help us understand how it became a market leader. First, let's talk about what the company does.

Waaree Energies Products

At its core, the company focuses on manufacturing solar Photo-Voltaic (PV) modules. These modules come in various types:

• Multicrystalline

• Monocrystalline

• Tunnel Oxide Passivated Contact (TopCon)

Additionally, the company also offers other flexible options like bifacial modules (Mono PERC) and BIPV modules. The company plans to upgrade technology at its existing manufacturing facilities, gradually phasing out multi-crystalline module production to meet the demand for advanced technologies. It will focus on increasing the production of higher-efficiency Mono PERC modules and other emerging technologies, like TopCon. The Chikhli facility for PV modules uses the latest technologies to produce high-efficiency, large-sized PV silicon wafers (G1, M6, M10, M12).

Now, on to the distribution and sales of these products.

Waaree Energies Revenue Streams

In FY2024, the company had the 2nd best operating income among all the domestic solar PV module manufacturers in India. Its revenue streams can be categorised into 4 main business segments:

1. Direct Sales to Utilities and Enterprises

This segment is all about large-scale solar projects, which brought in Rs 5,897.754 crore, making up a hefty 51.75% of the company's total revenue from operations. It shows a clear move toward bigger projects and closer partnerships with clients.

2. Retail Sales

By partnering with franchisees, it reaches rooftop and MSME customers while also benefiting from revenue generated through franchisee-led EPC projects. The company has a pan-India retail network consisting of 369 franchisees as of 30th June 2024. 

WEL has made significant investments in the development of its franchise system, focusing on comprehensive training, resource allocation, and ongoing support. As a result, this segment contributed Rs 2,209.89 crore, or 19.39%, to its total revenue in Fiscal 2024.

3. Export sales of solar PV modules and EPC services

The Company has successfully developed a large customer base globally, and its products are sold globally, including to customers in the United States, Canada, Italy, Turkey, Hong Kong and Vietnam.

In Fiscal 2024, it brought in a substantial Rs 2,098.62 crore from exports, which accounted for about 18.42% of the total revenue. This shows how far WEL's reach extends.

4. Additional revenue sources

This segment contributed Rs 1,191.35 crore (10.44%) to the total revenue in Fiscal 2024. It encompasses:

• Engineering, Procurement, and Construction (EPC) services

• Operation and Maintenance (O&M) services

• Ancillary products

• Export incentives

• Renewable electricity generation

• Scrap sales

The company is also taking significant steps towards backward integration by getting into solar cell manufacturing. This move is all about reducing reliance on external suppliers and cutting down on costs related to imported solar cells.

In addition, WEL is focusing on reaching more rooftop and MSME customers, ensuring widespread adoption of solar solutions with a strong network of over 350 franchisees spread across India. 

The Growing Solar Energy Industry

People are starting to flock towards solar energy, as it is one of the lowest-cost options for generating electricity worldwide. As a result, investments in the industry are also set to rise. 

At COP26, India committed to reaching net-zero emissions by 2070 and installing 500 GW of non-fossil fuel-based capacity by 2030. The country has also increased Renewable Purchase Obligations (RPOs) for Distribution Companies (DISCOMS) to speed up the transition. 

To meet the Net Zero Emissions Scenario by 2050, solar generation is expected to grow by an average of 25% annually from 2022 to 2030. This means we'll see a 3x increase in solar capacity by 2030.

The International Energy Agency (IEA) predicts that global solar PV capacity will surpass:

• Natural gas by 2026 

• Coal by 2027

This shift is powered by strong policy support and initiatives aimed at boosting renewable energy demand. In India, for example, several ambitious programs are pushing the renewable agenda forward:

• 24x7 Power for All: Nationwide initiative for uninterrupted power supply

• SAUBHAGYA Scheme: Electricity connections for all households

• Pradhan Mantri Suryodaya Yojana: Rooftop solar systems for 1 crore households, with state subsidies

• Green Energy Corridor: Infrastructure for renewable energy and (RE) power evacuation

• Green City Scheme: Promoting sustainable and eco-friendly city development

• PLI Scheme: Incentives for domestic manufacturing

• Low Corporate Tax Rates: Encouraging investment and growth

India's renewable energy capacity is projected to nearly double between 2022 and 2027, with solar PV contributing 75% of this growth. The country has immense solar potential, receiving 5 lakh crore trillion kWh of solar energy annually. The National Institute of Energy estimates India's solar potential at 748 GW, assuming only 3% of its land is used for solar installations.

Key highlights:

• Renewable energy capacity (including large hydro) surged from 63 GW in 2012 to over 200 GW by August 2024.

• Solar power grew from 0.09 GW in 2012 to nearly 89 GW, becoming central to this transformation.

• Renewables now comprise 44% of India's total installed generation capacity.

While solar leads the charge, other renewable sources like wind also hold immense promise. As of August 2024, only 7% of India's estimated 696 GW wind potential has been tapped, signalling vast opportunities for growth.

With strong policies, untapped resources, and increasing investments, India is set to emerge as a global leader in renewable energy.

Waaree Energies Position in The Industry

In just a few years, the company has significantly expanded its installed capacity, growing from 4 GW in FY 2022 to 12 GW as of 30 June 2024. This growth positions Waaree Energies as a major player in the industry.

Looking at market share:

When it comes to the domestic market, the top 5 companies—Waaree Energies, TATA Power Solar, Adani Solar (Mundra Solar PV), ReNew Photovoltaic, and FS India (First Solar)—together account for approximately 51% of the total Approved List of Models and Manufacturers (ALMM) enlisted module manufacturing capacity, which stands at about 56.52 GW.

Waaree Energies Financials

As of 30 June 2024, Waaree Energies reported a total revenue of Rs 3,400.47 crore from its operations. Here's a breakdown of that revenue:

• Sale of solar power products: Rs 3,039.72 crore

• Sale of services: Rs 123.4 crore

• Sale from Engineering, Procurement, and Construction (EPC) projects: Rs 226.21 crore

These figures reflect the strong demand for solar solutions and services, solidifying Waaree Energies' position in the growing renewable energy market. However, there are still risks that the company could come across.

Waaree Energies: Internal Risk Factors 

Like any business, WEL faces some risks that could impact its operations. Let's break down the main ones to watch out for:

1. Over-Dependence: A big chunk of its revenue comes from just a few key customers. If the company loses any of these customers or sees a drop in sales, it could hurt its financial health and operations.

2. Export Risks: The company makes a lot of its revenue from exports, especially to markets like the US. However, international sales come with their own set of risks, such as changes in trade policies or economic issues in those markets. These could impact the bottom line.

3. Supply Chain Dependence: WEL imports materials from China to keep its manufacturing running. Restrictions or tariffs on these imports could drive up costs or even cause supply delays, messing with the company's production and financial performance.

4. Location Risks: Most of its manufacturing is based in Gujarat, India. While this region is industrially active, it also exposes the company to local risks, like natural disasters or infrastructure problems, which could disrupt its operations.

5. Falling Solar PV Prices: The company's business also depends on the price of solar PV modules. If the prices of these modules fall, profit margins could shrink, making it harder for the company to stay financially healthy.

For now, the company seems to be steering clear of these risks.

So, Waaree Energies isn't just riding the solar wave—it's leading the charge! From humble beginnings in 1990 to becoming India’s biggest solar company, it has come a long way with 12 GW installed capacity and a hefty 21% market share. 

However, as with any investment, be mindful of the risks—such as over-dependence on key customers, export uncertainties, supply chain challenges, and fluctuating solar PV prices—that could impact its future performance. Make sure to assess the risks before diving in!