Waaree Energies shares plunge 6% despite 79% jump in Q1 revenue – What’s the big worry for this renewable play?

The market reacted to weakening operating margins and rising costs, dragging the solar company’s shares lower in early trade. The stock fell as much as 6% in the early trade before recovering some of the losses. 

So, what exactly made investors cautious despite another quarter of higher sales and profits?

Let’s break down the numbers.

Why are Waaree Energies shares under pressure?

The biggest concern for the market was not revenue or profit. Rather, it was the profitability.

Although this renewable company continued to report strong business growth, it faced pressure on margins as input costs increased sharply during the quarter. Higher raw material expenses weighed on operating performance, leading investors to reassess near-term earnings expectations.

The company’s cost of materials consumed jumped to Rs 4,843.93 crore during the April-June quarter from Rs 2,962.43 crore a year ago, a sharp rise in input costs.

As a result, the company’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin narrowed to 18.15%, compared with 22.53% in the corresponding quarter last year.

JM Financial: Margin weakness remains the key concern

Domestic brokerage house, JM Financial has maintained an ‘ADD’ rating on the stock with a 12-month target price of Rs 3,296, implying an upside potential of around 20.5% from the current market price.

According to the brokerage report, reported revenue stood at Rs 7,900 crore but included a one-off tariff refund of Rs 3.5 billion. Excluding this exceptional item, adjusted revenue came in at Rs 7,600 crore, which was below both the brokerage’s and Street expectations.

The brokerage said, “Revenue of Rs 79 billion includes a one-off revenue of Rs 350 crore representing a refund of reciprocal duties.”

It also highlighted the pressure on profitability, stating that “EBITDA margin came in at 14%.” Gross margins and profit after tax were also below estimates, while finance costs increased sharply during the quarter.

Order book remains healthy despite softer quarter

Even as margins remained under pressure, the company continued to strengthen its order pipeline.

As per JM Financial report, “Order inflows were Rs 16,000 crore in Q1FY27. Order book stands at Rs 61,500 crore.”

The brokerage also noted that Waaree expects its 10 gigawatt cell manufacturing facility to begin production during FY27, which could support future capacity expansion.

Apart from this, the company completed the acquisition of a 55% stake in Associated Power Structures and also commissioned 5.2 gigawatt-hour Battery Energy Storage System (BESS) container manufacturing capacity at Rola, Gujarat.

What did the June quarter look like?

Waaree Energies reported a 14% year-on-year rise in consolidated net profit to Rs 850 crore, compared with Rs 745 crore in the same quarter last year.

Revenue from operations saw an even stronger expansion, climbing 79% year-on-year to Rs 7,932 crore from Rs 4,426 crore.

The solar panel manufacturing business remained the biggest contributor to the company’s earnings. Revenue from this segment increased 91% to Rs 7,399.82 crore, compared with Rs 3,872.35 crore in the year-ago quarter.

What investors need to watch next?

The company continues to report strong demand, expanding revenues and a healthy order pipeline. 

The key monitorables will be whether raw material costs begin to ease, margins recover from current levels and the company’s capacity expansion translates into stronger earnings without putting further pressure on profitability. 

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