Waaree Energies‘ share price is up over 1% in early trade today after the sharp cut on February 25. Speaking on the implications of the US tariff action on the company, Nuvama Research said that the company is =strategically placed to benefit from the multi-decadal renewable energy and green hydrogen opportunity. The brokerage house does not see any impact from the 126% US countervailing duty and has maintained a ‘Buy’ rating.
Nuvama has set a arget price of Rs 3,867 on Waaree Energies, and this indicates nearly 43% upside potential from the current market price.
Nuvama Research on Waaree Energies: No impact from 126% US duty
A key concern for the market has been the preliminary 126% US countervailing duty on solar module imports from India. Nuvama Research said Waaree Energies has clarified that the tariff is linked to the origin of solar cells and not the location of module manufacturing.
As the report states, “The tariff is imposed based on the place of origin of the cell and not the manufacturing location of the module.”
Nuvama Research added that Waaree Energies currently sources cells from regions where 10% tariffs apply and does not expect any material impact from the 126% duty. The report also noted that contracts carry a pass-through clause and that exports to the US have remained consistent despite earlier tariffs.
Nuvama Research on Waaree Energies: Expanding US manufacturing capacity
Nuvama Research said Waaree Energies is increasing its US footprint to support its order book and capture better realisations.
The brokerage wrote, “Waaree has 2.6GW capacity in the US currently. 1.6GW capacity is under construction, which will take total capacity to 4.2GW over the next one to two quarters.”
Nuvama Research said US demand is expected at 180–200GW annually over the next two to three years, which could support the company’s growth and margins.
Nuvama Research on Waaree Energies: Strong order book of over 25GW
According to the report, Waaree Energies has an order book of more than 25GW valued at around Rs 60,000 crore, with 65% contribution from overseas markets.
Nuvama Research stated, “Despite increased tariffs this year, the company has reported strong growth in its order book.”
The brokerage said the current and planned US manufacturing capacity is expected to substantially support existing US customer commitments.
Nuvama Research on Waaree Energies: Revenue and EBITDA to surge at 33% and 40% CAGR
Nuvama Research estimates that revenue and EBITDA will grow at a strong pace over FY25–28E.
The report said, “We estimate Waaree’s EBITDA would surge at a 40% CAGR over FY25–28E, increasing from INR27bn to INR80bn driven by a robust 33% CAGR in revenue.”
Revenue is projected to rise from Rs 14,444.5 crore in FY25 to Rs 33,894.6 crore in FY28E, while adjusted profit is estimated to increase from Rs 1,912.5 crore to Rs 4,623.4 crore over the same period, based on Nuvama Research estimates.
Nuvama Research on Waaree Energies: Backward integration to improve margins
The brokerage said Waaree Energies is moving beyond module manufacturing into cells and wafers, which could improve profitability.
Nuvama Research wrote, “The shift from moderate-margin ALMM modules to manufacturing high-margin DCR modules shall improve Waaree’s EBITDA margin.”
The report expects EBITDA margin at 23.6% in FY26E and around 22% in FY27E and FY28E, supported by scale and integration benefits.
Nuvama Research on Waaree Energies: Diversified revenue mix creates moat
Nuvama Research said about 70% of Waaree Energies’ revenue comes from premium and high entry barrier markets such as retail, exports, and US manufacturing, and EPC and O&M services.
The brokerage noted, “70% of Waaree’s revenue is contributed by high premium and high entry barrier markets.”
It added that expansion into transformers, inverters, battery energy storage systems, and electrolysers is expected to dilute any future margin pressure from pricing competition.
Nuvama Research on Waaree Energies: Valuation to moderate as earnings grow
While current valuations appear high on FY25 numbers, Nuvama Research believes earnings growth will make them more reasonable.
The report stated, “Based on our earnings, we reckon the P/E shall reflect a more reasonable 17x FY28E EPS.”
Conclusion
Nuvama Research has retained its ‘Buy’ rating on Waaree Energies, citing no impact from US duties, strong order book visibility, expanding US capacity, backward integration into cells and wafers, and an estimated 33% revenue growth annually between FY25-FY28. The brokerage believes earnings growth over the next few years could support valuations and deliver 43% upside for the stock from current levels.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.