Waaree Energies Ltd - Feb 2025 Earnings Call Transcript Analysis

February 6, 2025 · 4 min read

Earnings Call Transcript Analysis Report #

Date of Call: January 31, 2025 Period Covered: Quarter and Nine Months Ended December 31, 2024

Key Metrics (Q3 FY25 Consolidated):
- Revenue: INR 3,545 crores (↑ 115% YoY)
- EBITDA: INR 809 crores (↑ 257% YoY)
- EBITDA Margin: 22.84%
- Profit After Tax (PAT): INR 507 crores (↑ 260% YoY)
Key Metrics (9M FY25 Consolidated):
- Revenue: INR 10,705 crores (↑ 24% YoY)
- EBITDA: INR 2,063 crores (↑ 56% YoY)
- EBITDA Margin: 19.28%
- Profit After Tax (PAT): INR 1,283.66 crores (↑ 60.62% YoY)
Comparisons:
- Significant YoY growth across all reported metrics for both Q3 and 9M periods.
- Q3 revenue was noted as similar to Q2, but gross margins expanded significantly (~500 bps QoQ). Management attributed this to profitable order selection, lower input costs (especially cells), increased focus on the higher-margin retail segment, supply chain diversification, and operational efficiencies.
Growth/Decline Areas: Strong growth driven by increased volumes (up 48% YoY for 9M) and improved profitability. The revenue mix shifted slightly towards domestic sales in Q3 (79% India, 21% International) compared to the order book composition, attributed to faster execution timelines in India.

Major Announcements:
- Commenced commercial operations at the US manufacturing facility (Houston, Texas) on January 22, 2025.
- Cell manufacturing facility update: Pilot production started. 1.4 GW Mono PERC lines in advanced trial production, commercial operations expected “very soon” (within days/weeks). 4 GW TOPCon lines to be operational by April-May 2025.
- Board approval for significant investments in adjacent energy sectors:
  - Green Hydrogen & Electrolyzer: INR 551 crores (Awarded 300 MW PLI for electrolyzer manufacturing, won SECI bid for 90,000 tons green hydrogen production).
  - Battery Business: INR 2,073 crores.
  - Renewable Power Infrastructure: INR 650 crores (linked to Enel acquisition).
  - Inverter Business: INR 130 crores.
- Acquisition of Enel Green Power India (subject to statutory approvals).
New Products/Services/Markets: Expansion into cell manufacturing (backward integration), entry into Green Hydrogen, Electrolyzers, Battery Storage, Inverters, and IPP (Independent Power Producer) segments. Focus on US market with local manufacturing.
Operational Changes: Increased focus on the domestic retail segment. Actively managing supply chains for cost optimization. Emphasis on operational efficiency and leanness.
Ongoing/Completed Projects: US factory operational. Cell factory commissioning underway. 6 GW PLI project (Ingot-Wafer-Cell-Module) remains on target for Odisha (expected 2027 operation). Enel acquisition in progress.

Industry Trends: Favorable macro conditions globally and in India. Global solar capacity projected to nearly triple by 2030 (to 5.8 TW). Indian capacity projected to grow from 98 GW (2024) to 280 GW (2030). Declining costs of solar and battery storage driving adoption. Favorable government policies (ALMM in India, IRA in US).
Competitive Positioning: Positioned as a leading solar manufacturer evolving into a broader energy player. Highlighting scale, operational efficiency, strong order book, and backward integration (cells) as competitive advantages.
Market Challenges/Opportunities:
- Opportunity: Strong demand in India (Retail/PM Surya Ghar, C&I, Utility) and US markets. ALMM policy supports domestic manufacturers. DCR (Domestic Content Requirement) market presents a specific opportunity addressed by own cell manufacturing.
- Challenge: Cell market, particularly DCR cells, is tight. Navigating potential US policy changes (IRA). Managing execution of large-scale expansions. Analyst questions raised concerns about potential future overcapacity in the cell market.
Market Share/Positioning Comments: Management emphasized their leading position and strong order book (26.5 GW / ~INR 50,000 Cr) as evidence of market strength. Differentiated market segments identified (Non-DCR, DCR, US Export, Captive/C&I).

Acknowledged Concerns:
- US Policy Uncertainty (IRA): Management acknowledged questions about IRA stability but stressed their US operations are designed to be profitable even without incentives.
- Cell Market Tightness: Acknowledged the tight supply for DCR cells, reinforcing the rationale for backward integration.
- Execution Risk: Managing multiple large-scale expansion projects simultaneously (Cells, PLI, US factory ramp-up, new ventures).
- Analyst Concerns on Overcapacity: Addressed questions about potential cell overcapacity by citing strong overall market growth projections globally and within India.
Regulatory Issues: Mentioned ALMM extension to cells by June 2026 as a positive driver. Navigating US import regulations and quality certifications. Enel acquisition subject to statutory approvals.
Supply Chain/Operational Constraints: Past visa issues for Chinese personnel (now “significantly alleviated”). Current equipment supply from China reported as stable. Complexity and safety concerns related to cell manufacturing utilities highlighted. Capacity is the main constraint on execution speed.
Market Uncertainties: Potential impact of US political changes on IRA and market sentiment (though management stated customers remain “unphased”). Price volatility in long-duration contracts (mitigated by contract structure).

Outlook: Very positive outlook based on strong order book, favorable market trends, and expansion plans. Aiming for continued strong performance.
Commitments/Targets:
- US factory operational (achieved Jan 2025).
- Cell Factory: 1.4 GW Mono PERC commercial ops “very soon”; 4 GW TOPCon ops by Apr-May 2025.
- Odisha PLI project on track for 2027 operation.
- Execution of investments in Hydrogen, Battery, Infra, Inverters.
- Commitment to maintaining/improving profitability using various levers.
Planned Investments: Significant capital allocation towards cell manufacturing, PLI project, US factory

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