Waaree Energies Eyes H2 Recovery on Cell Ramp, Nomura Keeps Buy, Cuts Target

Waaree’s Q1 Misses on Margins, but Management Stands by Full-Year Guidance

Waaree Energies delivered a mixed first quarter for FY27, with revenue topping Nomura’s estimates but gross margins coming in well below expectations. Adjusted EBITDA margin contracted 815 basis points year-on-year to 14.4%, pressured by elevated commodity costs and a lower share of high-margin international revenue. While overall revenue climbed 71%, the bottom line told a different story, with EBITDA excluding one-offs rising only 9% and missing the brokerage’s projection by 13%.

Despite the margin squeeze, management has kept its full-year EBITDA guidance unchanged at Rs7,000–7,700 crore, betting on a strong recovery in the second half. Nomura, in its research note, backed that outlook, pointing to several catalysts: the ramp-up of cell production, a rebound in US module shipments, and growing demand for both domestic content requirement (DCR) and non-DCR modules. The brokerage maintained its ‘Buy’ recommendation but trimmed its target price to Rs3,740, reflecting near-term headwinds.

The company ended the quarter with a record order book of Rs61,500 crore, up 26% year-on-year, supported by fresh inflows of Rs16,000 crore. With 90% of the order book comprising module orders worth roughly 25 GW, Waaree appears well placed to convert that pipeline into revenue, provided it can navigate current margin pressures and execute its capacity expansion plans.

What’s Driving Waaree’s Resilience Despite Near-Term Headwinds

Margin Compression and Commodity Costs

The 815-basis-point slide in EBITDA margin was the quarter’s biggest disappointment. Nomura attributed the squeeze to higher aluminium and silver prices—key inputs for solar modules—and a drop in the contribution of overseas business, which typically commands better margins. While management didn’t adjust full-year guidance, the Q1 miss suggests that meeting the Rs7,000–7,700 crore EBITDA target will require a material uptick in H2 profitability, especially if raw material costs stay elevated.

Cell Production Ramp-Up as the Key Catalyst

Waaree’s plan to aggressively scale cell manufacturing is central to the H2 recovery narrative. Quarterly cell output is projected to hit 1.1 GW in Q2 and 1.5 GW in the second half, as capacity utilisation improves. Higher in-house cell supply will allow the company to sell more premium DCR modules, which carry better pricing and margins. If the ramp proceeds on schedule, it could offset weakness in the commodity-exposed module business and support the guided earnings growth.

US Expansion and Order Book Strength

The brokerage sees a recovery in overseas revenue as the US module manufacturing plant ramps up and shipment delays that plagued Q1 are resolved. Waaree plans to commission 1.6 GW of US module capacity this fiscal year, and the order book already includes a significant chunk of international contracts. With total module and cell capacities slated to reach 28 GW and 15 GW respectively by year-end, the company is betting big on scale. The order book provides near-term visibility, but execution risk on simultaneous US and domestic expansions remains a factor to watch.

New Ventures: BESS and Adjacent Businesses

Waaree is also pushing into battery energy storage systems (BESS), transformers and inverters—a diversification that Nomura factored into its unchanged EBITDA estimates. The 20 GWh BESS capacity target by FY28, with an initial 3.5 GWh expected online in FY27, could open a new revenue stream and reduce dependence on module sales alone. Still, the BESS business is capital-intensive and competitive, and its contribution to near-term earnings is likely to be modest.

Investor Takeaways: Assessing Waaree’s FY27 Trajectory

Nomura’s Buy rating signals conviction that the H2 recovery will materialise, but the lowered target suggests tempering near-term expectations. Investors should focus on:

• Quarterly cell production numbers: Achieving the projected 1.1 GW in Q2 and 1.5 GW in H2 is critical for margin recovery; any delay could put the Rs7,000–7,700 crore EBITDA guidance at risk.
• US manufacturing milestones: Commissioning of the 1.6 GW US module plant and a normalisation of overseas shipments will directly influence the revenue mix and margin profile.
• Commodity price trends: While management did not adjust guidance, sustained high aluminium or silver prices would keep pressure on margins and might force a revision later.
• Order book conversion: The Rs61,500 crore order book offers strong visibility, but execution—especially balancing domestic and international deliveries—will be the real test.
• BESS ramp-up: Watch for operational updates on the 3.5 GWh BESS capacity expected this year; smooth progress could de-risk future estimates, while setbacks might weigh on sentiment.

With the stock trading at around 10 times enterprise value to FY28 EBITDA, the valuation does not yet price a flawless H2, but investors will need confidence in the company’s ability to deliver on all fronts for the re-rating to sustain.