It is not excellent relative to its valuations
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I think the falling should stop now as the PE has come down to 87 from 300+ in May
PE will come to 70 minimum looking at the fall post which PEG becomes lucrative
Ideally on technical world it requires consolidation atleast for a quarter than upmove will be stable.
need to absorb the supply which is relentless currently
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Few of my takeaways from Q1 FY25 of Waaree Renewable Technologies
Waaree Renewable Technologies is riding high on Indiaโs renewable energy wave, with a robust order book of 2,191 MW and successful execution of 217 MW in Q1 FY25. The companyโs revenue soared by 83.31% year-on-year to INR 236.35 crores, reflecting strong momentum in the sector. With the governmentโs ambitious target of 500 GW grid-connected renewable capacity by 2030, Waaree seems well-positioned to capitalize on this growth trajectory.
๐๐ญ๐ซ๐๐ญ๐๐ ๐ข๐ ๐๐ฅ๐ฎ๐๐ฉ๐ซ๐ข๐ง๐ญ:
The company is diversifying beyond solar EPC into areas like battery energy storage systems (BESS), pump storage, and hybrid projects. This strategic pivot aims to capture a larger slice of the evolving renewable energy pie. Waareeโs exclusive partnership with 5B Maverick for pre-fabricated solar solutions could be a game-changer, potentially accelerating project deployment timelines.
๐๐๐ซ๐ค๐๐ญ ๐๐ฒ๐ง๐๐ฆ๐ข๐๐ฌ:
Indiaโs renewable energy sector is witnessing a shift from pure-play solar to integrated solutions. The emergence of green hydrogen and the push for round-the-clock (RTC) power are reshaping the landscape. Waareeโs foray into these segments aligns well with these emerging trends.
๐๐ง๐๐ฎ๐ฌ๐ญ๐ซ๐ฒ ๐๐๐ข๐ฅ๐ฐ๐ข๐ง๐๐ฌ:
Government support remains strong, with increased budget allocations and ambitious targets. The introduction of Approved List of Models and Manufacturers (ALMM) for solar modules provides a boost to domestic players. Rising corporate interest in captive renewable energy projects and the nascent green hydrogen sector offer additional growth avenues.
๐๐ง๐๐ฎ๐ฌ๐ญ๐ซ๐ฒ ๐๐๐๐๐ฐ๐ข๐ง๐๐ฌ:
Module price volatility remains a concern, though Waaree claims to mitigate this through back-to-back contracts. Land acquisition delays and monsoon-related disruptions can impact project timelines. The sectorโs heavy reliance on government policies and targets poses a potential risk if thereโs a shift in priorities.
๐๐ง๐ฏ๐๐ฌ๐ญ๐จ๐ซ/๐๐ง๐๐ฅ๐ฒ๐ฌ๐ญ ๐๐ฎ๐๐ฌ๐ญ๐ข๐จ๐ง๐ฌ:
Questions were raised about the sustainability of high EBITDA margins (17% in Q1 FY25). Management maintained that 15% is a sustainable level, attributing fluctuations to project-specific factors. The companyโs ability to maintain these margins in a competitive landscape will be crucial to watch.
๐๐จ๐ฆ๐ฉ๐๐ญ๐ข๐ญ๐ข๐ฏ๐ ๐๐๐ง๐๐ฌ๐๐๐ฉ๐:
Waaree claims to differentiate itself through better margins compared to peers (who reportedly operate at 9-9.5% margins). The management attributes this to their long-standing vendor relationships and selective project approach. However, as the sector grows more competitive, maintaining this edge could become challenging.
๐ ๐ฎ๐ญ๐ฎ๐ซ๐ ๐๐ซ๐จ๐ฃ๐๐๐ญ๐ข๐จ๐ง๐ฌ:
The management hinted at executing around 1.8 GW of projects in the next 9-12 months. The companyโs bid pipeline stands at an impressive 15.5 GW, indicating strong future growth potential.
๐๐๐ฉ๐ข๐ญ๐๐ฅ ๐๐๐ฉ๐ฅ๐จ๐ฒ๐ฆ๐๐ง๐ญ:
Waaree operates an asset-light model, requiring minimal capex for growth. The focus seems to be on reinvesting cash flows to fuel growth rather than significant capital expenditures or shareholder returns.
๐๐ฉ๐ฉ๐จ๐ซ๐ญ๐ฎ๐ง๐ข๐ญ๐ข๐๐ฌ & ๐๐ข๐ฌ๐ค๐ฌ:
Opportunities lie in the expanding BESS market (estimated at INR 14 lakh crores by 2030) and emerging sectors like green hydrogen. Risks include potential policy shifts, intensifying competition, and execution challenges in new technology areas.
๐๐๐ ๐ฎ๐ฅ๐๐ญ๐จ๐ซ๐ฒ ๐๐ฅ๐ข๐ฆ๐๐ญ๐:
The regulatory landscape appears supportive, with policies like ALMM benefiting domestic players. However, the sectorโs heavy dependence on government initiatives makes it vulnerable to policy changes.
๐๐จ๐ง๐ฌ๐ฎ๐ฆ๐๐ซ ๐๐ฎ๐ฅ๐ฌ๐:
Thereโs growing interest from both government entities (NTPC, SECI, SJVN) and private players in outsourcing EPC work, benefiting companies like Waaree. The trend towards integrated renewable solutions is driving demand for comprehensive service providers.
Disclaimer: This is a general analysis and does not constitute financial advice.
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On Wednesday, November 22, Waaree Renewable Technologies announced that it has secured a โน1,233.47 crore order to build a ground-mounted solar PV project with a capacity of 2,012.47 MWp DC. The order was awarded by an Indian company specializing in renewable energy development, according to a Bombay Stock Exchange (BSE) filing.
Any thoughts on the recent steep correction making its PEG of .25 or so
I am baffled as well, with upcoming results(management commentry from last concall seems extremely postive) and potential order fo 500 cr from waaree energies on the horizon it was a decently attractive pick, also peg as been quite attractive for some time.
If insider news then bad luck but more so it feels like with broader market correction this stock took the beating hardest. It was leader of the renewable era !!
Disclaimer : Invested arounf 1300 levels
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Largest order in the solar sector of 2GW from jindal and as per the article, Jindal seems to give rest of the order to them only. Even then it baffles me why it didnโt show any resilience?
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I see three events 1) Circuit limits changed to 20% 2) CFO quit 3) Q3 results to be announced on 16th Jan. Not sure what is causing such major correction, while forecast is very good
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Q3FY25 results quick observations
- Latest quarters YoY growth was ~12%.
- Their YoY growth in each of the preceding 4 quarters was ~250%, ~84%, ~345% and ~337%.
- Currently, 9MFY25 revenues up ~86% YoY
- Doesnโt look like they will achieve the 3x revenue growth in FY25 (mgmt guidance)
- Executed 1GW of order book so far
- Needs to execute 0.8GW of order book to achieve 1.8GW order book execution guidance (mgmt guidance)
- 9MFY25 EBITDA at 16.46%, close to mgmt guidance of EBITDAs of 15% in FY25
- Order book now stands at 3.3GW due to 2GW order of JSW (Started year with orderbook of 2.3GW, executed 1GW so far)
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Thanks for the update !! Managment did not clearly walk the talk here. I donโt see them covering it up in just 1 quarter.
Disclaimer : Exited the position, consistenly failing to deliver results when we take in account the current valuations.
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During Waaree Renewablesโ Q3FY25 Earings concall, the management, in response to the final few questions, mentioned a target of 500-600 MW for Q4. The revenue will depend on the volume of work. They also stated that, assuming โน1 crore per MW, this would translate to โน500-600 crore in revenue.
Disclaimer: I have reduced my position but am waiting to see if it rebounds from this point.
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Future Outlook: (from Screener notes of latest concall transcript)
- Management is optimistic about continued growth in the renewable energy sector, citing strong government support and a significant increase in project tenders.
- The company expects to execute 500 to 600 MW in the next quarter and aims for an annual execution capacity of 3 to 3.5 GW.
- Overall, the company is confident in maintaining a margin of approximately 15% in the medium term.
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Credit ratings upgrade by CARE Ratings CARE Ratings Upgrades Waaree Renewable Technologies Limited (WRTL) Credit Rating to โAโ with โstableโ Outlook - SolarQuarter
For the past 5โ6 months, no mutual funds have held this stock. In December, Motilal Oswal Quant Fund acquired a stake but sold it the following month.
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