Waaree Energies Limited

Waaree Energies confirmed that the recently announced 126% countervailing duty by the US Department of Commerce on Indian solar imports will not materially impact its operations. This is primarily because the company does not use India-based cells for its US exports and has diversified its supply chain to jurisdictions with significantly lower tariffs, typically around 10-15%. Management reiterated that their existing supply chains are non-China and non-India for US-bound products, ensuring continued compliance and operational stability.

The company is aggressively expanding its US manufacturing footprint, with current module capacity of 2.6 GW expected to reach 4.2 GW by year-end 2026. This includes 1 GW of acquired HJT capacity in Arizona for $20 million and 1.6 GW under construction in Texas, both projected to be operational by mid-2026. Management highlighted a surging US solar demand, with annual consumption forecast to grow from 50 GW to 70-80 GW, and a pipeline of 180-200 GW over the next 2-3 years, driven by data centers and AI.

Waaree has maintained a non-China sourcing strategy for its US supplies since 2019, proactively diversifying its supply chain to low-tariff jurisdictions. The company is also investing in Oman for fully traceable, non-Chinese polysilicon, with commercial production expected within 2-3 months. This strategy is critical for complying with the tightening US Foreign Entity of Concern (FEOC) regulations, which prohibit components with over 30% Chinese holding, positioning India as a key alternative source.

Waaree reported a strong and growing order book, increasing from over 40,000 crores at the start of the year to 60,000 crores by the last earnings call, net of nine months of dispatches. Management assured that margins remain stable, as the US tariffs apply to the point of cell manufacturing, and their current sourcing strategy from 10-15% duty jurisdictions allows for consistent profitability. The company's diversified revenue streams, including retail (20-25%), overseas (30-35%), and service (18-20%), contribute to higher realizations and premium margins.

The acquisition of a 1 GW HJT capacity in Arizona for $20 million was highlighted as a strategic capital allocation, offering significantly lower capex compared to previous projects and ensuring better paybacks. This facility is ready for HJT and TOPCon manufacturing with minimal modifications. The company's long-term view on the US market, as outlined in its IPO documents, guides its continuous evaluation of expansion options and investments in new capacities.

India's module manufacturing capacity is currently over 100 GW, with cell capacity at 25-30 GW, projected to increase to 50-60 GW over the next 2-3 years. Wafer capacity is also expected to grow to 30-40 GW over the next 4-5 years. This robust domestic capacity, combined with FEOC compliance, positions India as a crucial global supplier, especially for markets like the US seeking non-Chinese sources.

Waaree is actively cooperating with the government on ongoing investigations regarding the use of Chinese cells for US exports, a process typically lasting 6-12 months. The company proactively made financial provisions in the last quarter to account for any potential impacts from these discussions. Management emphasized continuous monitoring of new regulations and developing alternative supply chains to mitigate risks and maintain flexibility in its global operations.