21 Mar , 2025 By : Debdeep Gupta
Nuvama Institutional Equities has initiated coverage on Waaree Energies with a 'Buy' rating with a target price of Rs 2,805 per share, citing strong growth prospects driven by capacity expansion and integration into new energy segments.
The shares of Waaree Energies are trading at Rs 11.75 as of 9:52 AM, on March 21, higher by 0.52 percent.
The brokerage projects a 30 percent revenue CAGR and 54 percent EBITDA CAGR for FY24–27, supported by a surge in module, cell, and wafer capacity. Waaree's margins are expected to peak at 24 percent by FY28, before moderating due to rising competition and lower import tariffs.
The company is expanding into green hydrogen, electrolyzers, lithium-ion cells, inverters, and battery energy storage systems (BESS) to diversify operations and sustain long-term growth. Nuvama likens the current phase of India’s renewable energy sector to the early IT boom of the 1990s, suggesting a multi-decadal opportunity.
On valuation, Waaree’s 24x FY25 estimated EV/EBITDA reflects its rapid growth trajectory, with expectations of a correction to 11x by FY27 estimated as earnings catch up. However, risks remain, including potential changes in import tariffs, evolving technology, and oversupply concerns in the module segment.
Waaree Energies' EBITDA margin is expected to rise from 14% in FY24 to 23% by FY27, driven by backward integration and a shift toward higher-margin DCR modules. Its solar module, cell, and wafer capacities are set to expand to 21GW, 11GW, and 6GW, strengthening competitiveness. Strong cash flows are expected to support capex and investments in allied areas, while its horizontal and vertical integration strategy aims to sustain long-term growth and de-risk the business.
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