Waaree Energies IPO 2024 : Detailed Analysis of this company
Waaree Energies Limited, one of India’s largest solar PV module manufacturers, recently received approval from the Securities and Exchange Board of India (SEBI) to launch its highly anticipated IPO, set to raise approximately ₹30 billion ($360 million). This IPO is a significant milestone not only for the company but also for the renewable energy sector in India. Here’s a detailed overview of Waaree’s journey, what it does, its key investors, and future growth opportunities.
History of Waaree Energies
Founded in 1989 by Hitesh Doshi, Waaree Group started as an industrial instrumentation company. In 2007, it ventured into the solar energy sector, leading to the establishment of Waaree Energies Limited. Over the years, it has emerged as a major player in the renewable energy industry, particularly in the manufacturing and distribution of solar photovoltaic (PV) modules. Currently, Waaree is India’s largest solar PV module manufacturer, with a production capacity of 12 GW.
With a strong focus on sustainable energy solutions, Waaree has diversified its offerings to include solar EPC (Engineering, Procurement, and Construction) services and a variety of solar power systems. This shift has enabled it to transform from a local industrial supplier to a global leader in renewable energy.
What Does Waaree Energies Do?
Waaree Energies primarily manufactures and exports solar PV modules, essential for capturing solar energy. The company also provides solar inverters, water pumps, and EPC solutions. This range of products makes it a versatile player in both utility-scale solar farms and smaller, individual projects.
Approximately 70% of Waaree’s revenue comes from exports, with the company holding around 50% of India’s solar PV export market. This strategic focus on international markets has allowed it to cement its reputation as a global player.
It operates across several segments within the solar energy sector, offering a comprehensive portfolio of products and services. The core activities of Waaree Energies include:
- Solar PV Module Manufacturing: Waaree produces high-efficiency solar PV modules used in residential, commercial, and industrial solar energy systems. With a production capacity of 12 GW, it leads the Indian market and is a key exporter of solar modules globally.
- EPC Services: The company provides Engineering, Procurement, and Construction (EPC) services for large-scale solar projects. This includes the design, construction, and maintenance of solar power plants, both grid-connected and off-grid.
- Solar Products: Apart from PV modules, Waaree also offers a range of solar energy products, such as solar water pumps, solar inverters, and solar rooftop systems.
- Energy Storage Solutions: As part of its commitment to innovation, Waaree is also exploring energy storage systems to complement its solar energy solutions.
- Project Development: Waaree is involved in the development of utility-scale solar farms, contributing to India’s renewable energy targets.
Key Investors and Financials
Key Investors:
- Samir Surendra Shah: A promoter of Waaree, offering 50,000 shares in the Offer For Sale (OFS).
- Chandrakar Investments: Offering 450,000 shares in the OFS.
- Waaree Sustainable Finance: Participating in the OFS with 2.7 million shares.
Financial Highlights:
- Revenue Growth: Waaree’s revenue has increased 3.5 times over the past three years, reaching ₹6,750 crore as of FY23.
- Profit Surge: The company’s profits surged 10 times in the same period, totaling ₹500 crore.
- Debt-Free Status: As of June 2023, Waaree operates with a net debt-free balance sheet.
- Returns: Waaree boasts a 26% Return on Equity (ROE) and a 31% Return on Capital Employed (ROCE), reflecting strong financial health.
- IPO Valuation: The IPO is expected to raise ₹3,000 crore, with the company’s estimated valuation sitting around ₹36,000 crore.
- Expansion Funding: The proceeds will be used to fund the construction of a 6 GW solar module and cell manufacturing facility in Odisha. This will be part of a broader expansion plan worth ₹9,000 crore.
- Order Book: Waaree’s order book for solar PV modules is currently 20.16 GW, nearly 1.6 times its current installed capacity, indicating a strong demand pipeline.
Growth Opportunities
Waaree Energies is well-positioned to benefit from India’s growing renewable energy targets, including the government’s goal of achieving 500 GW of installed renewable capacity by 2030. This national drive for sustainable energy solutions provides a promising environment for Waaree to expand its influence.
Expansion Plans
Waaree has laid out ambitious plans to triple its production capacity to 38 GW over the next five years. This includes establishing a new 6 GW facility in Odisha, a move financed in part by the IPO proceeds. Additionally, Waaree is exploring international expansion, including plans to set up a 3 GW solar cell facility in the United States.
Market Leadership
Waaree already holds a dominant position as the largest solar PV module manufacturer in India, surpassing competitors like Adani Solar and Vikram Solar. By increasing production capacity and maintaining competitive pricing for its modules, Waaree is set to solidify its leadership in the solar energy market. Its ability to sustain high EBITDA margins of around 14% further underscores its competitive edge.
Risks and Challenges
Despite its robust growth and expansion plans, Waaree faces some risks inherent to the solar energy industry. One significant challenge is the declining prices of solar modules. Between 2010 and 2023, module prices dropped by 73%, driven by oversupply and advances in technology. While lower prices help increase solar energy adoption, they can also squeeze manufacturers’ margins. Waaree will need to continuously innovate to counterbalance this pricing pressure.
Additionally, the global market oversupply poses another risk, which could affect future profitability. However, given its strong financials, clear strategy for expansion, and a growing demand for solar energy, Waaree appears well-equipped to handle these challenges.
Conclusion
Waaree Energies’ IPO comes at a critical juncture for both the company and India’s renewable energy ambitions. As India pushes towards its solar energy goals, Waaree’s role as a leading solar PV manufacturer is crucial. The company’s solid financials, aggressive expansion plans, and growing market share position it as a compelling investment opportunity for those looking to capitalize on the global shift towards renewable energy.
Investors should be aware of the risks associated with falling solar module prices and the highly competitive nature of the industry. However, Waaree’s leadership, strong market position, and financial health make this IPO one to watch for long-term growth.
Read more – WCIL IPO