Waaree Energies Limited is coming up with an IPO size of Rs. 4,321.44 crore. The company is going for fresh issues of Rs. 3,600 crore and an offer for sale of Rs. 721.44 crore, which will open on 21st October 2024. The issue will close on 23rd October 2024 and be listed on the stock exchange on 28th October 2024. In this article, we will explore the Waaree Energies Limited IPO Review and analyze its strengths and weaknesses. Let’s begin!
Waaree Energies Limited IPO Review: About the Company
Waaree Energies Limited (WEL) was established in 1990 and is headquartered in Mumbai, Maharashtra. It is India’s largest manufacturer of solar photovoltaic (PV) modules, with a total installed capacity of 12 GW as of June 30, 2024. The company began its solar PV module manufacturing operations in 2007, focusing on providing high-quality, cost-effective sustainable energy solutions. Waaree Energies Limited’s mission is to support global efforts in reducing carbon footprints, promoting sustainability, and enhancing the overall quality of life through clean energy.
Waaree Energies operates five state-of-the-art manufacturing facilities across India, enabling it to meet growing market demands both domestically and internationally. Its extensive manufacturing capacity is a key driver of its leadership position in India’s solar energy sector. The company’s international presence spans over 20 countries, highlighting its commitment to serving global markets. The company has over 388 franchise locations across India.
The company is expanding its capacity with a 6 GW ingot wafer, solar cell, and PV module manufacturing facility in Odisha, India. This expansion supports Waaree Energies Limited’s goal to capitalize on the growing global solar energy demand. Waaree Energies is planning to manufacture a capacity of 3 GW of solar projects in the US, reinforcing its leadership in the renewable energy space.
Waaree Energies offers a comprehensive range of products, including solar PV modules like Mono PERC, Bifacial, BIPV, Flexible, and Polycrystalline modules, inverters, energy storage systems, and turnkey EPC services. The company has a customer base that spans various sectors, including residential, commercial, and industrial markets. Waaree Energies continues to lead the solar energy market, contributing significantly to India’s renewable energy capacity growth and fostering a sustainable future.
Waaree Energies Limited IPO Review: Industry Overview
The global solar energy market is growing rapidly, driven by increasing demand for renewable energy. In 2023, global solar PV capacity reached 1,411 GW, with 347 GW of new capacity added that year. The industry is projected to grow at a 14% CAGR, with total installed capacity expected to reach 2,733 GW by 2028. Countries like China, the United States, and India lead in solar installations, contributing to a cleaner energy mix. According to the International Energy Agency (IEA), global solar PV capacity is expected to triple by 2028, surpassing natural gas by 2026 and coal by 2027.
India’s solar energy sector is expanding quickly, contributing significantly to its renewable energy targets. As of 2023, India had installed over 72 GW of solar PV capacity, accounting for nearly 10% of its total renewable capacity, making it the fourth-largest solar market globally. India will aim to reach 500 GW of non-fossil capacity by 2030 and targets to achieve net zero by 2070. The Indian government also aims to achieve 280 GW of solar capacity by 2030, accounting for 60% of its renewable energy goals. Solar PV will play a pivotal role in India’s energy transition, driven by domestic manufacturing and government policies supporting solar power adoption.
Waaree Energies Limited IPO Review: Financial Highlights
Looking into the financial analysis of Waaree Energies Limited, the company’s revenue has increased from Rs. 6,750.87 crore in FY23 to Rs. 11,397.61 crore in FY24, which has grown by 68.83%. The revenue of the company increased to Rs. 3,408.90 crore on June 30, 2024, as compared to the previous year, June quarter 2023. Waaree Energies Limited’s revenue has grown at a CAGR of 99.83% over the last two years.
Waaree Energies Limited has earned revenue from India by 42.23% and outside India by 57.77% in FY24. The company has contributed revenue from the sale of solar power products by 87.69%, the sale of services by 4.41%, the sale of engineering, procurement, and construction projects by 7.43%, the generation of electricity from renewal sources by 0.25%, and other operating revenue by 0.23% in FY24.
Waaree Energies Limited’s net profit has increased massively by 154.73%, which is from Rs. 500.28 crore in FY23 to Rs. 1,274.38 crore in FY24. In Q1 of FY25, the net profit of the company is to be Rs. 401.13 crore. The net profit has grown at a CAGR of 299.87% over the last two years.
The EBITDA of Waaree Energies Limited has raised from 944.13 crore to Rs 1,809.58 crore in FY24. The EBITDA margin has increased from 13.76% in FY23 to 15.56% in FY24. The PAT margin has also improved from 7.29% in FY23 to 10.96% in FY24. Waaree Energies Limited’s ROCE decreased from 31.61% to 26.29% in FY24. The ROE of the company has improved from 26.26% in FY23 to 30.26% in FY24.
Furthermore, the company has increased total borrowings from Rs. 273.48 crore in FY23 to Rs. 317.32 crore in March FY24. In Q1 FY25, the company has reduced its total borrowing of Rs 261.24 crore as compared to March 2024. However, the debt-to-equity ratio has improved from 0.15x to 0.08x in FY24, which is because of the increased total equity as compared to the previous year.
Listed Peers of the Company
Waaree Energies Limited’s peer competitors are Websol Energy System Limited and Premier Energies Limited. Waaree Energies Limited has the highest revenue compared to the other peer competitors listed in the stock market. However, the company stands out with an impressive production capacity of 12 GW as compared to competitors such as Websol Energy System of 0.55 GW and Premier Energies of 4.13 GW as of June 30, 2024.
In FY24, Waaree Energies had a low debt-to-equity ratio of 0.08x, compared to Websol Energy System’s 1.70x and Premier Energies 2.29x. Premier Energies has the highest order book of 57.79 GW as compared to Waaree Energies 16.66 GW as of June 30, 2024. In PAT margin, Websol Energy System has loss-making, Waaree Energies has 10.96% and Premier Energies has 3.36% in FY24
The below images show the comparison of peer competitors of Waaree Energies Limited.
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Strengths of the Company
- High manufacturing capacity: Waaree Energies has an installed capacity of 12 GW as of June 2024, making it India’s largest solar PV module manufacturer, ensuring scalability.
- Strong Export Market: Waaree was India’s largest solar module exporter in FY2024, with exports increasing by 87% to 6,077 MW, capitalizing on global demand.
- Backward Integration Strategy: Waaree’s backward integration into ingot wafer and solar cell production enhances cost control and reduces reliance on third-party suppliers, supporting profitability.
- Strategic Global Expansion: Waaree’s planned 3 GW manufacturing facility in the U.S. strengthens its international presence. This expansion helps reduce reliance on India and capitalize on global market opportunities.
- Focus on Green Hydrogen: Waaree’s foray into green hydrogen and electrolyser manufacturing positions it well for future energy markets, diversifying its growth avenues.
- Extensive Manufacturing Network: The company operates five manufacturing facilities across India, supporting large-scale production and allowing it to meet domestic and global demand effectively.
Weaknesses of the Company
- High Capital Requirements: Waaree’s aggressive expansion plans, including the 6 GW facility in Odisha, require substantial capital, which may strain financial resources.
- Intense Global Competition: The company faces extreme competition from established global players, especially from China. This competition could corrupt Waaree Energies Limited’s market share and place downward pressure on pricing and margins.
- Reliance on Government Policies: Waaree’s success is heavily dependent on favorable government policies and incentives. Any sudden changes in policies, like tariff adjustments or subsidy reductions, could negatively affect its growth.
- Logistical Challenges: Waaree’s dependence on third-party logistics for the transportation of modules can lead to delays, affecting customer satisfaction and delivery timelines.
- Delays in project execution: Any delays in setting up new facilities or securing regulatory approvals, such as the planned U.S. plant, could hamper the company’s expansion efforts.
- Dependency on External Financing: Waaree relies on external financing for large-scale projects. Changes in financial market conditions, like higher interest rates, could make financing more expensive and impact project feasibility.
Waaree Energies Limited IPO Review: Key IPO Information
The shares of Waaree Energies Limited’s price in the grey market were trading at a 90.82% premium as of October 9th, 2024. The shares in Grey Market traded at Rs 2868. This gives it a premium of Rs. 1365 per share over the cap price of Rs. 1503.
Promoters: Hitesh Chimanlal Doshi, Viren Chimanlal Doshi, Pankaj Chimanlal Doshi, and Waaree Sustainable Finance Private Limited
Book Running Lead Managers: Axis Capital Limited, IIFL Securities Limited, Jefferies India Private Limited, SBI Capital Markets Limited, Nomura Financial Advisory and Securities (India) Private Limited, Intensive Fiscal Services Private Limited, and ITI Capital Limited.
Registrar to the Offer: Link Intime India Private Limited
The Objective Of The Issue:
- The company will establish a 6GW ingot wafer, solar cell, and solar PV module manufacturing facility in Odisha, India.
- The remaining amount will be used for general corporate purposes.
Conclusion
In conclusion, Waaree Energies Limited stands as India’s largest solar PV module manufacturer with impressive growth and expansion plans. The company is India’s largest manufacturer of solar photovoltaic modules, boasting an installed capacity of 12 GW. Waaree’s strategic expansion plans, including a new facility in the U.S., highlight its commitment to meeting global renewable energy demands.
The company’s financial performance is strong, with significant revenue growth and a low debt-to-equity ratio, reflecting sound management practices. The company’s focus on backward integration and green hydrogen demonstrates its commitment to innovation and sustainability. Waaree is well-positioned to capitalize on the growing renewable energy market both domestically and internationally.
What are your thoughts on Waaree Energies Limited’s expansion plans? Will you invest in Waaree Energies Limited IPO? Do you think the company’s focus on green hydrogen will secure future growth? Share your thoughts in the comments!
Written By, Nikhil Naik
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