Waaree Energies Gets 'Buy' Rating From Nuvama On Multi-Decadal Growth Potential

Nuvama has initiated a 'Buy' rating on Waaree Energies Ltd. with a target price of Rs 2,805, citing the company’s strong growth potential in the renewable energy sector, particularly in solar and green hydrogen.

Waaree's aggressive plans for backward integration and its ability to tap into emerging energy segments set the stage for substantial earnings growth in the coming years, the brokerage said on Friday.

Nuvama forecasts 30% revenue CAGR and 54% EBITDA CAGR over financial year 2024-27, driven by Waaree’s expanding capacity and increasing high-margin realisations. Waaree's order book of 26.5GW with a value of Rs 50,000 crore also supports the forecast.

The company plans to increase its module capacity to 21GW, cell capacity to 11GW, and wafer capacity to 6GW, the brokerage said in its note. These expansions, along with a shift to high-margin Domestic Content Requirement modules, are expected to boost Waaree’s EBITDA margin to 23% by financial year 2027.

Waaree is also diversifying into green hydrogen, electrolysers, battery storage, and energy storage systems, positioning itself as a vertically and horizontally integrated new energy player.

This broad expansion into multi-decade growth sectors provides Waaree with the flexibility and resilience needed to mitigate potential risks, while simultaneously capitalising on the massive growth expected in the green hydrogen and solar energy markets, the brokerage said on Friday.

Nuvama sees Waaree's current position in the Indian renewable energy sector as akin to the Y2K-like technology boom of the 1990s. India’s solar market is poised for a massive J-curve growth, eventually extending to green hydrogen and green ammonia, where Waaree is strategically positioned.

The company’s EPC business is also growing rapidly, with a projected 49% CAGR. This growth, combined with increased capacity and strategic diversification, is expected to enhance profitability and cash flow.