Waaree Energies Ltd. posted numbers that looked reassuring on the surface and considerably softer underneath, and Anand Rathi's July 30 result update was candid about the gap. Analysts Sweta Jain, Sahil Sheth and Kartik Sharma maintained a Buy rating on the solar manufacturer but trimmed the target price to Rs 3,333 a share. Against a current market price of Rs 2,624, that target implies roughly 27% upside. The company's market capitalization stands at approximately Rs 787 billion, according to the report.

Headline vs. Reality

Where the Quarter Went Wrong

Module production utilisation of 56% reflected delayed project offtake amid uncertainty around the implementation of India's ALMM-II domestic-manufacturing rules, compounded by geopolitical disruptions that hit shipments to the United States. Export revenue fell to just 22% of the mix in the first quarter, down from 32% a year earlier, forcing the company to lean more heavily on merchant sales within the US market — sales that don't benefit from the tax incentives tied to captive American manufacturing under the Inflation Reduction Act. Cell utilisation offered a partial silver lining, improving to 67% from 57% in the prior quarter, and management has guided for monthly cell production to rise to roughly 400 megawatts, up from about 300 megawatts in the quarter just ended.

Guidance Held, But the Bar for Delivering It Just Rose

Despite the soft start, management reiterated its full-year EBITDA guidance of Rs 70 billion to Rs 77 billion for fiscal 2027 — implying a meaningful recovery is still expected over the remaining three quarters. That recovery is pinned on several levers: higher domestic-content-requirement cell production, normalisation of US shipment volumes, strengthening domestic demand as ALMM-II rules take fuller effect, and the commercial launch of the company's battery energy storage systems business, with a 5.15-gigawatt-hour container facility now operational and commercial supplies scheduled to begin in the second quarter. A record order book of Rs 615 billion, equivalent to 25.2 gigawatts, provides revenue visibility, with roughly 40% of that backlog sourced domestically.

Why the Target Price Came Down

Anand Rathi cut its EBITDA estimates by 9% for fiscal 2027 and 8.2% for fiscal 2028, and — perhaps more tellingly — lowered the valuation multiple it applies to the company's core module business to 11 times earnings, down from 12 times, aligning it with peer Premier Energies rather than treating Waaree as a premium name. The brokerage was explicit that sustained improvement in profitability and cash generation will be necessary to justify any return to a valuation premium above that peer level.

Financial Summary

Key Risks for Investors

• Delayed capacity commissioning: The company's Gujarat cell facility and broader backward-integration timeline, including a planned 10-gigawatt cell operation by December 2026, carry execution risk that could push margin recovery further out.
• Persistently low utilisation: If module utilisation fails to recover from the current 56% toward normalised levels above 70%, the operating leverage the brokerage is counting on for margin improvement won't materialize.
• Softer exports: Continued reliance on lower-margin US merchant sales, rather than captive manufacturing eligible for Inflation Reduction Act incentives, would keep diluting the profitability of the company's American business.