Waaree Energies stock gets downgrade from UBS; brokerage cuts rating, price target

Shares of Waaree Energies slipped over 2% in early deals today after global brokerage UBS downgraded the stock to 'Neutral' from 'Buy'. UBS also cut price target of the green energy firm to Rs 3100 from Rs 4400. Waaree Energies slipped 2% on Tuesday to Rs 2818 against the previous close of Rs 2881.45.

Market cap of the firm stood at Rs 81,416 crore. Total 0.43 lakh shares of the firm changed hands amounting to a turnover of Rs 12.18 crore on BSE

The brokerage assigned a lower target multiple of 21 times 12M fwd PE (from 28 times). 

UBS said the downgrade incorporates a higher discount to industry/sector peer average and lower margins, led by near-/medium-term challenges amid ongoing sector consolidation. 

Waaree’s Rs 30,000 crore capex plan against Rs 13,000 crore last year) is expected to scale its capacity to 15.4GW modules & 10GW cell/ingot–wafer by FY27/28E (20% of total domestic capacity). 

The strategy should help Waaree sustain its sector leadership with higher level of integration, said UBS. 

The brokerage listed out some variables that need further clarity. 

The risk to sectoral profitability from significant new capacity, as well as execution of its ambitious capex plan & limited clarity on potential returns in nascent segments such as BESS are among them. 

Waaree Energies is an Indian manufacturer of solar PV modules with an aggregate installed capacity of 12 GW. Its product portfolio includes solar energy products consisting of the PV modules such as multicrystalline modules; Monocrystalline modules; and TopCon modules.