Waaree Energies shares down 42% in 4 months; is it a value-buying opportunity?

Shares of Waaree Energies Ltd have seen a sharp correction post their debut at Dalal Street. The stock, which was seen as a multibagger stock pick, has tumbled as much as 42 per cent in the last four months, wiping out a big chunk of wealth from investors' kitty.

Waaree Energies made its Dalal Street debut on October 28, 2024, when the company raised a total of Rs 4,321.44 crore via its primary stake sale by selling its shares for Rs 1,503 apiece. The stock zoomed nearly 150 per cent from its IPO price of Rs 3,740.75 on November 6, 2024. However, the stock was down Rs 2,172.10 on Monday, about 42 per cent down from its all time high. However, it tested its post-listing lows of Rs 2,030 on January 27, 2025.

Incorporated in December 1990, Waaree Energies Limited is an Indian manufacturer of solar PV modules with an aggregate installed capacity of 12 GW. The product portfolio of solar energy products consists of the PV multicrystalline modules, monocrystalline modules and TopCon modules.

Brokerage firms continue to remain divided on the stock. Some of the analysts cite the stock as still an expensive buy considering the new threat and developments in the US. However, others are positive on the renewable theme and believe that the stock is headed for a strong revenue and bottomline growth in the coming financial years, despite keeping the stock unrated for now.

Waaree Energies has a domestic order book of 14.4GW. The demand-supply mismatch will last for at least the next 2 years. India exported 6GW of modules in FY24 with Waaree and Adani being the top exporters. Waaree has set up a local module manufacturing plant in the USA with a capacity of 1.6GW for manufacturing solar modules to mitigate any export issues, said Share India Securities.

"The business case for investing in solar companies remains strong in our opinion with strong growth in demand. However, companies like Waaree listed at a valuation of 65-70x P/E. We believe most of the solar stocks were abnormally valued at listing. However, post a 30 per cent correction, the stocks have entered investable territory," it said.

Waaree’s investor day highlighted its successful backward integration into solar cells with further capacity expansion. Waaree announced four new initiatives— electrolyzer manufacturing, BESS manufacturing, inverters and renewable power infrastructure. All of these are aimed at increasing wallet share in renewable energy projects, said Kotak Institutional Equities.

"The impact of the initiatives would be seen over the medium term. Uncertainty around US IRA and tariffs remains a key overhang for Waaree. We reduce FV by 10.5 per cent to Rs 2,280, driven by 1.9-12.5 per cent cut in estimates, which is largely driven by a cut in IRA incentives, as for certain US clients, Waaree will be passing on the IRA benefits," Kotak said with a 'reduce' tag.

Waaree Energies reported a 260 per cent YoY rise in its net profit at Rs 507 crore in the December 2024 quarter, while its revenue soared 117 per cent YoY to Rs 3,458 crore. The US contributed 15-20% of its revenue mix. Waaree Energies had an orderbook of 26.5 GW valued at Rs 50,000 crore as of December 31, 2024.

KR Choskey believes that the expansion of module manufacturing capacity announced by multiple players over the next two years should lead to a supply-demand ratio of 1.5-2 times for modules, potentially resulting into moderation in price realization for solar modules. Waaree being the largest module manufacturer in India, it said.

"Waaree should be well-equipped to sustain itself through evolving industry dynamics in a relatively favorable manner and take advantage of operating leverage due to its sheer size and scale. With these expansions, we believe Waaree is expected to deliver revenue/Ebitda /PAT CAGR of 31 per cent/48 per cent/40 per cent during FY24 to FY27E, respectively," KR Choksey added.