Waaree Energies shares may rise 42%; Why brokerages bullish on this multibagger?

Brokerage firms, both domestic and global, continue to remain positive on Waaree Energies as the stock has drawn a fresh interest from Chola Securities and UBS. Both the brokerages have suggested to buy the stock, citing an upside potential of 42 per cent in the stock.

Chola Securities has released an assessment of Waaree Energies, highlighting its competitive standing and future growth prospects within the renewable energy sector. The brokerage firm has established a target price for Waaree Energies shares, suggesting a positive outlook for the company driven by its strong market position and anticipated expansion.

Waaree Energies is currently trading at a trailing twelve-month price-to-earnings ratio (PER) of 40 times, slightly below the industry average of 41.01. Chola Securities has valued the company at a PER of 25 times the FY27 estimated earnings, implying a discount of 40 per cent to current multiples. This valuation results in a target price of Rs. 3,850 per share, indicating a potential upside of 24 per cent over the next 15 to 18 months, said Chola.

The company is well-placed to capitalise on domestic and international demand for solar modules. With a market share of approximately 15–18 per cent in India, Waaree Energies is positioned as the country's largest solar module manufacturer. This dominance is supported by its listing in the Ministry of New and Renewable Energy's Approved List of Models and Manufacturers, which mandates procurement for government-backed solar projects, it noted.

Shares of Waaree Energies dropped nearly 4 per cent to Rs 3102.90, during the trading session on Thursday, with its market capitalization barely holding Rs 90,000 crore mark. The stock had settled at Rs 3218.10 on Wednesday. The stock is down 17 per cent from its 52-week high at Rs Rs 3,740.75, hit in November 2024.

Waaree Energies' integrated capabilities and execution track record enhance its competitive edge. Its consolidated order book, valued at Rs. 49,000 crore, and a pipeline of 100 GW provide significant earnings visibility. Moreover, Waaree Energies' transition from a module manufacturer to a fully integrated renewable solutions provider expands its market share potential from 45–50 per cent to 85–90 per cent, supporting sustained growth, the brokerage noted.

The global energy transition offers substantial opportunities for Waaree Energies. As nations increase renewable energy adoption, Waaree's positioning in the United States, backed by its 3.6 GW module capacity, prepares it to capture a share of the 86.11 GWAC of projected solar installations. Similarly, in the Middle East, Waaree Energies can benefit from diversification needs as MENA countries are expected to add 30 GW of solar capacity by 2030, Chola notes.

Despite a worldwide decline in per-watt module prices from 2022 to 2025, Waaree Energies has succeeded in expanding its margins, demonstrating its cost efficiency and value addition capabilities. This has been bolstered by the company's ongoing capital expenditure aligned with India’s Domestic Content Requirement policies, enhancing export competitiveness.

The company's financial performance shows a robust revenue compound annual growth rate of 71.7 per cent over three years, with EBITDA margin expansion from 3.9% in FY22 to 18.8 per cent in FY25. Waaree Energies plans to increase its module manufacturing capacity to 26 GW by FY27, supported by backward integration into solar cells, wafers, and ingots, ensuring sustainable margin growth and supply chain resilience.

Chola Securities' analysis underscores Waaree Energies as a key player in the renewable energy sector, capable of benefitting from structural shifts in global markets. The brokerage firm's target price and rating reflect Waaree's potential to continue expanding its market influence and profitability amidst an evolving energy landscape. Chola has a target price of Rs 3,850 on Waaree, suggesting a 24 per cent upside in the stock.

Shares of Waaree Energies were listed at the bourses in October 2024, when the company Rs 4,321.44 crore via IPO, selling its shares for Rs 1,503. The stock has surged more than 100 per cent so far.

Overseas brokerage firm UBS recently initiated coverage on Waaree Energies, with a 'buy' rating and a price target of Rs 4,400, which implies a potential upside of 42 per cent from today's low. Waaree's capacity-led earnings acceleration is underway and it expects Waaree's EBITDA margins to expand 640 basis points between financial year 2025-2028, said UBS.

The global brokerage firm is positive on the Waaree considering multiple tailwinds including backward integration and scale provide edge capacity-led earnings acceleration underway, highly rewarding transition from scale to integration and long-term integrated capacity in focus.