The stock rallied 10.13% following the results announcement, reflecting investor enthusiasm over the company's sustained growth momentum. Revenue growth accelerated to 118.81% YoY, reaching ₹7,565.05 crores in Q3 FY26, whilst operating margins expanded to 25.49%, marking the highest quarterly margin in recent history. The results underscore Waaree Energies' ability to capitalise on India's renewable energy transition whilst maintaining pricing power in a competitive landscape.
The December 2025 quarter marked a watershed moment for Waaree Energies, with the company reporting its strongest-ever quarterly performance across multiple parameters. Sequential growth remained equally impressive, with net profit climbing 26.10% quarter-on-quarter from ₹842.55 crores in Q2 FY26, whilst revenue grew 24.72% QoQ. This consistent acceleration across consecutive quarters signals robust underlying demand dynamics in the solar manufacturing sector.
| Quarter | Revenue (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | Op. Margin |
|---|---|---|---|---|---|
| Dec'25 | 7,565.05 | +24.72% | 1,062.46 | +26.10% | 25.49% |
| Sep'25 | 6,065.64 | +37.05% | 842.55 | +13.06% | 23.19% |
| Jun'25 | 4,425.83 | +10.54% | 745.20 | +20.41% | 22.53% |
| Mar'25 | 4,003.93 | +15.81% | 618.91 | +25.62% | 23.04% |
| Dec'24 | 3,457.29 | -3.28% | 492.69 | +36.23% | 20.88% |
| Sep'24 | 3,574.38 | +4.85% | 361.65 | -8.24% | 14.68% |
| Jun'24 | 3,408.90 | — | 394.14 | — | 16.21% |
Financial Performance: Margin Expansion Drives Profitability Surge
Waaree Energies' Q3 FY26 financial performance reflected exceptional operational execution, with the company achieving its highest-ever quarterly revenue of ₹7,565.05 crores. The 118.81% year-on-year revenue growth was complemented by significant margin expansion, with operating margins (excluding other income) reaching 25.49%, up from 20.88% in the year-ago quarter. This 461 basis points improvement demonstrates the company's pricing power and operational leverage as production scales up.
The profit after tax margin stood at 14.63% in Q3 FY26, reflecting efficient cost management despite rising employee costs, which increased to ₹167.75 crores from ₹85.17 crores year-on-year. Other income contributed ₹196.18 crores during the quarter, up from ₹87.98 crores in Q3 FY25, indicating improved treasury management and better utilisation of surplus cash. Interest costs rose to ₹93.28 crores from ₹30.85 crores YoY, primarily attributable to increased working capital requirements to support the accelerated revenue growth.
On a nine-month basis for FY2026 (April-December 2025), Waaree Energies reported consolidated net sales of ₹18,056.52 crores, representing robust growth momentum. The company's ability to maintain high margins whilst scaling operations rapidly positions it favourably to capitalise on India's ambitious renewable energy targets. Depreciation costs increased to ₹267.26 crores in Q3 FY26 from ₹89.05 crores in the year-ago period, reflecting ongoing capacity expansion initiatives.
Operational Excellence: Industry-Leading Returns on Capital
Waaree Energies demonstrates exceptional operational excellence, evidenced by its industry-leading return on capital employed (ROCE) of 52.91% as of the latest reporting period, significantly above the sector average. The company's average ROCE over recent years stands at 49.40%, highlighting consistent capital efficiency and superior asset utilisation. This remarkable performance stems from the company's vertically integrated manufacturing capabilities and strategic positioning in the high-growth solar panel market.
The company's return on equity (ROE) of 23.53% reflects strong profitability and efficient deployment of shareholder capital. Higher ROE indicates that Waaree Energies generates substantial profits relative to its equity base, a critical strength for long-term value creation. The balance sheet remains robust, with the company operating as a net cash entity (average net debt to equity of -0.44), providing substantial financial flexibility for future growth investments without relying on external debt.
Capital Efficiency Highlights
ROCE at 52.91%: Waaree Energies' exceptional return on capital employed places it amongst India's most efficient manufacturers. The company generates ₹52.91 in operating profit for every ₹100 of capital employed, demonstrating superior asset productivity and pricing power in the solar manufacturing value chain.
Zero Net Debt Position: With net debt to equity at -0.44, the company maintains a fortress balance sheet with surplus cash, enabling aggressive capacity expansion without financial strain. This positions Waaree Energies to capitalise on market opportunities whilst competitors face capital constraints.
Fixed assets expanded significantly to ₹3,595.61 crores as of March 2025 from ₹1,162.47 crores in the previous year, reflecting substantial capital expenditure on manufacturing capacity enhancement. Current assets stood at ₹13,156.82 crores, providing ample liquidity to support working capital requirements. The company's debt-to-EBITDA ratio of 0.62 remains comfortably low, whilst its EBIT-to-interest coverage ratio of 12.62 times provides substantial cushion for debt servicing obligations.
The Growth Engine: Scaling Production Amidst Surging Demand
Waaree Energies' revenue trajectory reflects the company's successful capacity expansion strategy and ability to capture market share in India's rapidly growing solar sector. The five-year sales compound annual growth rate (CAGR) of 39.80% underscores sustained demand momentum, whilst the EBIT CAGR of 84.97% demonstrates improving operational leverage as the business scales. This acceleration in profitability growth relative to revenue expansion highlights the inherent operating leverage in the solar manufacturing business model.
The company's sales-to-capital-employed ratio of 1.36 times indicates efficient asset turnover, with each rupee of capital employed generating ₹1.36 in revenue. Employee costs as a percentage of revenue remain well-controlled at 2.22% in Q3 FY26, despite the absolute increase reflecting workforce expansion to support higher production volumes. Operating cash flow for FY2025 reached ₹3,158.21 crores, the highest in the company's history, demonstrating strong cash generation capabilities.
Capacity Expansion: Positioning for Future Growth
Waaree Energies' aggressive capital expenditure programme, evidenced by investing cash flows of ₹6,805 crores in FY2025, reflects the company's commitment to expanding manufacturing capacity to meet surging demand. The company's ability to generate strong operating cash flows of ₹3,158 crores whilst simultaneously investing heavily in capacity expansion demonstrates robust business fundamentals and management's confidence in sustained demand visibility.
| Metric | FY2025 | FY2024 | FY2023 | Growth Trend |
|---|---|---|---|---|
| Net Sales (₹ Cr) | 14,444.00 | 11,397.00 | 6,750.00 | Strong ▲ |
| Operating Profit (₹ Cr) | 2,721.00 | 1,574.00 | 834.00 | Accelerating ▲ |
| PAT (₹ Cr) | 1,928.00 | 1,274.00 | 500.00 | Strong ▲ |
| Operating Margin % | 18.8% | 13.8% | 12.4% | Expanding ▲ |
| PAT Margin % | 13.3% | 11.2% | 7.4% | Improving ▲ |
Industry Leadership: How Waaree Energies Compares to Peers
Waaree Energies holds a commanding position within India's solar manufacturing ecosystem, with a market capitalisation of ₹76,525 crores making it the largest company in the Other Electrical Equipment peer group. The company's financial metrics compare favourably against direct competitors, particularly in terms of capital efficiency and profitability. Waaree's ROE of 23.53% positions it competitively within the sector, demonstrating superior capital allocation relative to most peers.
The company trades at a price-to-earnings ratio of 25.71x, which appears reasonable relative to its growth trajectory and industry positioning. Compared to Premier Energies (26.94x PE) and Apar Industries (29.77x PE), Waaree's valuation multiple reflects a modest premium justified by its market leadership and consistent execution. The price-to-book ratio of 6.05x, whilst elevated in absolute terms, remains below Premier Energies' 9.32x, suggesting relative value considering Waaree's superior scale and operational efficiency.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity | Div Yield % |
|---|---|---|---|---|---|
| Waaree Energies | 25.71 | 6.05 | 23.53 | -0.44 | 0.08 |
| Premier Energies | 26.94 | 9.32 | 34.58 | -0.12 | 0.14 |
| Apar Industries | 29.77 | 5.76 | 21.80 | 0.07 | 0.73 |
| Emmvee Photovoltaic | 36.65 | 14.14 | 0.00 | 0.00 | — |
| Genus Power | 17.31 | 4.17 | 10.77 | 0.52 | — |
| Vikram Solar | 51.21 | 2.41 | 10.18 | 0.01 | — |
Waaree Energies' net cash position (debt-to-equity of -0.44) provides a significant competitive advantage over peers, enabling the company to invest aggressively in capacity expansion without financial constraints. Whilst the dividend yield of 0.08% remains modest, this reflects management's strategy of prioritising reinvestment in growth opportunities over immediate shareholder distributions—a prudent approach given the substantial market opportunity ahead.
Valuation Analysis: Premium Justified by Growth Trajectory
Waaree Energies currently trades at a market price of ₹2,660.45, representing a 31.15% decline from its 52-week high of ₹3,864.40 but a 47.10% premium to its 52-week low of ₹1,808.65. The stock's recent correction from peak levels provides a more attractive entry point for investors seeking exposure to India's renewable energy theme. The company's valuation grade of "Very Expensive" reflects elevated multiples relative to historical averages, though this must be contextualised against the exceptional growth trajectory and market opportunity.
At a P/E ratio of 26x, Waaree trades below the sector average P/E of 31x, suggesting relative undervaluation compared to industry peers. The EV/EBITDA multiple of 15.91x appears reasonable for a company delivering 115% profit growth and maintaining industry-leading returns on capital. The price-to-book ratio of 6.05x, whilst elevated, reflects the market's recognition of Waaree's superior earning power and competitive positioning within the solar manufacturing value chain.
The company's enterprise value to sales ratio of 3.59x reflects the market's confidence in Waaree's ability to sustain high margins and convert revenue growth into shareholder value. With the stock currently trading 31% below its peak, the risk-reward equation appears more favourable than at previous highs, particularly for investors with a medium to long-term investment horizon. The absence of promoter pledging and the company's excellent quality grade provide additional comfort regarding corporate governance and financial stability.
Shareholding: Institutional Confidence Building Gradually
Waaree Energies' shareholding pattern reveals stable promoter holding at 64.22% as of December 2025, demonstrating strong promoter commitment to the business. Foreign institutional investor (FII) holding increased sequentially to 6.91% from 6.35% in the previous quarter, signalling growing international investor interest in the company's growth story. The 0.56 percentage point increase in FII holding during Q3 FY26 reflects positive sentiment following the strong quarterly results.
Mutual fund holding remained relatively stable at 1.31%, down marginally from 1.32% in the previous quarter. Insurance company holdings increased to 0.13% from 0.04%, indicating institutional investors are gradually building positions. The non-institutional holding declined to 26.01% from 26.60%, suggesting a shift towards more stable institutional ownership. With zero promoter pledging, investors can be confident that promoter interests remain aligned with minority shareholders.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | QoQ Change |
|---|---|---|---|---|
| Promoter Holding | 64.22% | 64.22% | 64.30% | 0.00% |
| FII Holding | 6.91% | 6.35% | 2.68% | +0.56% |
| Mutual Fund Holding | 1.31% | 1.32% | 1.42% | -0.01% |
| Insurance Holdings | 0.13% | 0.04% | 0.04% | +0.09% |
| Other DII Holdings | 1.41% | 1.46% | 1.40% | -0.05% |
| Non-Institutional | 26.01% | 26.60% | 30.16% | -0.59% |
The gradual increase in FII participation from 0.70% in March 2025 to 6.91% in December 2025 represents a significant vote of confidence from sophisticated global investors. With 462 FII investors and 23 mutual funds holding stakes, the company is gaining broader institutional acceptance. The relatively low overall institutional holding of 9.77% suggests substantial room for further institutional accumulation, which could provide price support and reduce volatility over time.
Stock Performance: Recent Correction Creates Entry Opportunity
Waaree Energies' stock performance over the past year reflects both the euphoria surrounding India's renewable energy sector and subsequent profit-taking following the sharp rally. The stock delivered a one-year return of 9.81%, outperforming the Sensex return of 8.20% by 161 basis points. However, shorter-term performance has been challenging, with the stock declining 13.13% over the past month and 24.31% over three months, underperforming the broader market significantly during this period.
The year-to-date performance shows a decline of 10.25% compared to the Sensex's 2.99% fall, resulting in negative alpha of 7.26 percentage points. This recent underperformance appears to be a healthy correction following the stock's spectacular post-listing rally. The six-month return of -14.22% versus the Sensex's 0.59% gain reflects profit-booking by investors who participated in the company's initial public offering and subsequent listing gains.
| Period | Stock Return | Sensex Return | Alpha | Performance |
|---|---|---|---|---|
| 1 Day | 10.13% | 0.93% | +9.20% | Strong Outperformance |
| 1 Week | 3.94% | -0.85% | +4.79% | Outperformance |
| 1 Month | -13.13% | -3.38% | -9.75% | Underperformance |
| 3 Month | -24.31% | -2.08% | -22.23% | Significant Underperformance |
| 6 Month | -14.22% | 0.59% | -14.81% | Underperformance |
| YTD | -10.25% | -2.99% | -7.26% | Underperformance |
| 1 Year | 9.81% | 8.20% | +1.61% | Marginal Outperformance |
The stock's beta of 1.20 indicates higher volatility than the broader market, with a volatility measure of 45.95% reflecting the inherent risk in a high-growth, relatively newly listed company. The risk-adjusted return of 0.21 over one year, whilst positive, remains below the Sensex's risk-adjusted return of 0.73, suggesting investors are being compensated less per unit of risk taken. The stock currently trades below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), indicating technical weakness that may persist in the near term.
"Waaree Energies' 116% profit growth and industry-leading margins demonstrate the company's ability to capitalise on India's renewable energy transition whilst maintaining pricing power—a rare combination in capital-intensive manufacturing sectors."
Investment Thesis: Quality Growth at Reasonable Valuation
Waaree Energies presents a compelling investment case built on four key pillars: exceptional quality fundamentals, positive near-term momentum, expensive but not unreasonable valuation, and mildly bullish technical setup. The company's excellent quality grade reflects its strong long-term financial performance, with an average ROE of 23.53% demonstrating superior capital efficiency. The five-year sales CAGR of 39.80% and operating profit CAGR of 84.97% underscore sustained growth momentum underpinned by structural demand drivers.
The near-term financial trend remains positive, with Q3 FY26 marking the highest quarterly performance across multiple parameters including net sales, operating profit, and profit after tax. The company's operating cash flow reached a record ₹3,158.21 crores in FY2025, providing substantial financial flexibility for capacity expansion and working capital management. The technical trend, whilst currently mildly bullish, reflects recent price consolidation following the sharp correction from peak levels.
The valuation, whilst expensive in absolute terms at 26x P/E and 6.05x P/BV, must be assessed in the context of the company's growth trajectory and competitive positioning. With 115% profit growth in the latest quarter and industry-leading margins of 25.49%, the premium valuation appears justified. The company's overall Mojo score of 78/100 and "BUY" rating reflect the balanced assessment of strong fundamentals offset partially by elevated valuation multiples.
Key Strengths & Risk Factors
KEY STRENGTHS
- Market Leadership: Largest solar panel manufacturer in India with commanding market share and brand recognition in the renewable energy sector
- Exceptional Profitability: Industry-leading ROCE of 52.91% and ROE of 23.53% demonstrate superior capital efficiency and competitive advantages
- Strong Growth Momentum: 115.64% YoY profit growth in Q3 FY26 with consistent margin expansion reflecting robust demand and operational leverage
- Fortress Balance Sheet: Net cash position with debt-to-equity of -0.44 provides financial flexibility for aggressive capacity expansion
- Margin Expansion: Operating margins improved to 25.49% from 20.88% YoY, demonstrating pricing power and economies of scale
- Cash Generation: Operating cash flow of ₹3,158 crores in FY2025 reflects strong business fundamentals and working capital efficiency
- Zero Promoter Pledging: Clean corporate governance with no pledged shares and stable 64.22% promoter holding
KEY CONCERNS
- Elevated Valuation: Trading at premium multiples (26x P/E, 6.05x P/BV) leaves limited margin of safety for execution disappointments
- High Volatility: Beta of 1.20 and volatility of 45.95% indicate significant price fluctuations typical of high-growth stocks
- Recent Price Correction: Stock down 31% from 52-week high and 24% over three months reflects profit-booking and technical weakness
- Rising Interest Costs: Interest expense increased to ₹93.28 crores from ₹30.85 crores YoY, impacting profitability as working capital needs grow
- Low Institutional Holding: Only 9.77% institutional ownership suggests limited analyst coverage and potential liquidity concerns
- Execution Risk: Aggressive capacity expansion programme requires flawless execution to justify current valuations and growth expectations
- Sector Cyclicality: Solar manufacturing sector subject to commodity price fluctuations, policy changes, and intense competition
Outlook: What to Watch
POSITIVE CATALYSTS
- Capacity Ramp-Up: Successful commissioning of new manufacturing lines driving revenue growth acceleration
- Margin Sustainability: Maintaining operating margins above 24% demonstrating pricing power and cost control
- Order Book Growth: Securing large orders from domestic and international customers validating market position
- Institutional Accumulation: Further increase in FII and mutual fund holdings providing price support
- Government Policy Support: Favourable policy announcements supporting domestic solar manufacturing under PLI scheme
RED FLAGS
- Margin Compression: Operating margins declining below 23% indicating pricing pressure or cost inflation
- Working Capital Deterioration: Significant increase in debtor days or inventory levels straining cash flows
- Capacity Utilisation: Lower-than-expected utilisation of new capacity impacting return on invested capital
- Competitive Intensity: Aggressive pricing by competitors or new capacity additions eroding market share
- Technical Breakdown: Stock breaking below ₹2,400 levels on sustained basis indicating further downside risk
The Verdict: Attractive Entry Point for Long-Term Growth
Score: 78/100
For Fresh Investors: The recent 31% correction from peak levels presents an attractive entry opportunity for investors seeking exposure to India's renewable energy theme. Waaree Energies' exceptional fundamentals—including 52.91% ROCE, 115% profit growth, and industry-leading margins—justify a "BUY" rating despite expensive valuation multiples. Investors should accumulate positions gradually over the next 2-3 months, targeting entry around current levels of ₹2,600-₹2,700. The stock's high volatility necessitates a long-term investment horizon of 3-5 years to benefit from India's structural shift towards renewable energy.
For Existing Holders: Continue holding with conviction. The Q3 FY26 results validate the investment thesis, with the company demonstrating sustained growth momentum and margin expansion. The recent price correction offers an opportunity to accumulate additional shares rather than exit. Existing investors should maintain their positions and consider averaging up on further weakness towards ₹2,400 levels. The company's fortress balance sheet, zero debt position, and industry leadership provide downside protection whilst offering substantial upside potential as capacity expansion materialises.
Fair Value Estimate: ₹3,200-₹3,400 (20-28% upside from current levels), based on 28-30x FY2027 estimated earnings, factoring in sustained 30%+ profit growth and margin stability at 24-25%. The target price assumes successful capacity ramp-up and stable competitive dynamics in the solar manufacturing sector.
Note— ROCE = (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. Investments in equity markets are subject to market risks, and investors may lose part or all of their invested capital.
