Waaree Energies: Asia’s Leading Solar Power Giant Set to Launch IPO

Waaree Energies, Asia’s largest solar power plant owner, is gearing up to launch its much-anticipated IPO. The company operates a 750 MW solar power plant in Rewa, Madhya Pradesh. Known as India’s largest solar photovoltaic (PV) manufacturer, Waaree is three times bigger than its nearest competitor, positioning itself as a dominant force in the renewable energy sector.

Founded in December 1990, Waaree Energies has become a key player in India’s renewable energy landscape. The company has an impressive installed capacity of 12 GW, a testament to its significant role in the country’s solar power development. Notably, its manufacturing capacity is three times that of its competitors, and it enjoys the second-best operating income in the industry.

Key Domestic Solar Module Manufacturers with Capacity

The Solar Industry in India: A Growing Powerhouse

India is the world’s third-largest energy consumer, and this demand is expected to rise rapidly. Between fiscal 2024 and 2029, India’s per capita electricity consumption is projected to grow at a compound annual growth rate (CAGR) of 5-7%. According to CRISIL’s Market Intelligence and Analytics, this consumption could reach 1,600 to 1,650 kWh by 2029.

India’s power sector is highly diversified, relying on both conventional sources (coal, natural gas, hydro, and nuclear power) and non-conventional sources like wind, solar, and biomass. The country aims to double its renewable power capacity between 2022 and 2027, with solar PV expected to contribute a substantial 75% share to this growth.

In 2023, India ranked sixth globally in terms of solar PV capacity, with an installed capacity of 72,767 MW and an additional 9,719 MW in the pipeline.

Waaree’s Strategic Positioning in a Growing Solar Market

India’s solar module exports surged in fiscal year 2023, largely due to restrictions on Chinese products. This created new opportunities for Indian manufacturers in the global market, with the USA emerging as the largest potential market. Although India’s export volumes still lag behind China, demand from the European Union, Africa, and Gulf countries is expected to increase. While most Indian manufacturers focus on the domestic market, global exports are steadily growing.

Between 2019 and 2024, nearly ₹14.7 trillion was invested in India’s power sector, and this figure is expected to increase to ₹24.5-25.5 trillion between 2025 and 2029, with the majority going toward power generation

Waaree Energies: Pioneering Technology and Capacity Expansion

Globally, there are three types of PV modules: monocrystalline, polycrystalline, and thin-film. The industry is shifting from polycrystalline to monocrystalline cell technology due to the latter’s higher efficiency. Monocrystalline cells, made from pure silicon crystals, are ideal for energy production, while polycrystalline cells are less efficient but more cost-effective. Today, monocrystalline cells hold a 97% market share, reflecting this shift in the industry.

Waaree Energies uses both multicrystalline and monocrystalline cell technologies in its solar PV modules, in line with global standards. The company is also adopting advanced technologies like Tunnel Oxide Passivated Contact (TopCon), which reduces energy loss and enhances overall efficiency, giving Waaree a competitive edge.

By June 30, 2024, Waaree had an aggregate installed capacity of 12 GW, a significant increase from 4 GW in fiscal 2022. This expansion includes a 1.3 GW solar module manufacturing facility in Noida, commissioned through its subsidiary, Indosolar Limited. Waaree’s product portfolio includes multicrystalline, monocrystalline, TopCon, flexible, and bifacial modules, catering to a wide range of solar energy needs.

The company operates five large manufacturing facilities across India, covering 143 acres. Ongoing and proposed expansion plans aim to increase the total solar PV module capacity to 20.90 GW, with solar cell capacity projects expected to reach 11.4 GW.

As of June 30, 2024, Waaree Energies had a substantial order book of 16.6 GW, including domestic, export, and franchisee orders. Notably, 3.75 GW of this order book is for Waaree Solar Americas Inc., a subsidiary based in the United States. The company is also setting up a fully integrated 6 GW facility, expected to begin commercial operations in fiscal 2027.

Financial Performance and IPO Details

Waaree Energies has shown remarkable financial growth, with revenue increasing by 70% and profit after tax (PAT) rising by 155% between the financial years ending March 31, 2023, and March 31, 2024. In fiscal year 2023, the company’s revenue surged by 132%, and its net profit skyrocketed by 528%. This growth continued into fiscal 2024, with a 70% increase in revenue and a 155% rise in net profit.

The company’s assets grew significantly, from ₹2,237.4 crore in March 2022 to ₹11,989.48 crore by June 2024. Waaree’s revenue also saw a sharp rise, from ₹2,945.85 crore in fiscal year 2022 to ₹11,632.76 crore in fiscal year 2024.

Waaree Energies is launching an IPO to raise ₹3,600 crore, which includes an offer for sale of 0.48 crore shares. The funds raised will partially finance the establishment of a 6 GW solar cell and module manufacturing facility in Odisha. The IPO is scheduled to open on October 21, 2024, and close on October 23, 2024, with a price band of ₹1,427 to ₹1,503 per share. The company is expected to be listed on the market on October 28, 2024

Risks and Challenges

While Waaree Energies is poised for growth, it faces certain risks. The company was awarded ₹19,232.40 million under the Solar PV Modules PLI Scheme, but its facility must be commissioned by April 2025. Any delays could reduce the PLI period or result in the loss of incentives. Additionally, India lacks a manufacturing base for polysilicon ingots and wafers, making Indian companies heavily reliant on Chinese imports. Any government restrictions on these imports could impact Waaree’s business.

Furthermore, over 50% of Waaree’s business comes from its top 10 customers, and more than one-third of its sales come from Gujarat. This dependency poses a risk if any major customer or region experiences a downturn

Conclusion

Waaree Energies is not only a leader in India’s solar industry but also a company with ambitious expansion plans and cutting-edge technology. With its upcoming IPO and strategic growth in both domestic and international markets, Waaree is well-positioned to capitalize on the global shift towards renewable energy. However, investors should remain mindful of the associated risks, including dependency on key customers and supply chain challenges