Emkay Research has reiterated its BUY recommendation on Waaree Energies, maintaining a target price of Rs4,260 against the current market price of Rs2,709, implying an upside of over 57%. The call comes amid heightened investor anxiety following the U.S. Department of Commerce’s preliminary imposition of a 126% countervailing duty (CVD) on solar cell imports from India. However, Waaree’s diversified sourcing strategy, robust U.S. capacity expansion, and strong order visibility mitigate regulatory risks. With EBITDA projected to nearly triple by FY26 and balance sheet leverage remaining negative, the brokerage sees structural earnings expansion intact and valuation multiples compressing meaningfully over the next two years.

Regulatory Shock, But Limited Fundamental Impact

Preliminary 126% CVD on Indian solar cells triggered sharp negative sentiment across Indian solar exporters. The U.S. Commerce Department alleges unfair subsidies, and the final ruling is expected by July 2026. A parallel anti-dumping investigation is also underway.

However, the critical distinction lies in product classification. The CVD applies to the country of origin of solar cells—not module assembly. Waaree does not deploy Indian-manufactured cells in its U.S. supplies. Instead, it sources from diversified, non-affected jurisdictions where tariff exposure is approximately 10%.

Moreover, modules using Indian cells represent less than 4% of total U.S. imports. This materially limits industry-wide disruption. Management has clarified that no margin impact is anticipated, and EBITDA guidance remains unchanged.

Strategic Supply Chain Architecture Shields Margins

Waaree’s resilience is rooted in its pre-emptive global sourcing architecture.

Non-China and FEOC-compliant sourcing has been secured for over two years. As U.S. Foreign Entity of Concern (FEOC) norms tighten—restricting Chinese equity participation to below 30% across facilities—Waaree has adjusted swiftly.

Key supply chain initiatives include:

Oman polysilicon acquisition (pilot production underway; commercial output expected within 2–3 months)

New upstream sourcing in Africa and the Middle East

Reduced exposure to high-duty Southeast Asian suppliers

The blended U.S. duty exposure has already declined from 19% to roughly 10%. No ADD or CVD proceedings are currently pending on Waaree’s active sourcing jurisdictions.

U.S. Capacity Expansion: Building a Strategic Beachhead

Waaree is aggressively scaling its American manufacturing footprint:

1.6GW operational module capacity in Texas

1GW acquired facility in Arizona (TopCon compatible)

Additional 1.6GW expansion underway in Texas

By mid-CY26, total U.S. capacity is expected to reach approximately 4.2GW, sufficient to address its 25GW U.S. order book, executable over 3–4 years.

The U.S. solar installation market is projected to expand to 70–80GW annually over CY25–26, up from a 50GW average in the prior four years, driven by AI data center demand and electrification trends.

Waaree currently exports 2–3GW annually from India to the U.S., in addition to local production.

Order Book Visibility and Revenue Mix Strength

Waaree entered FY26 with an order book of approximately Rs400bn, which expanded to Rs600bn by Q3FY26, net of dispatches.

Revenue segmentation highlights structural resilience:

20–25% from retail (premium margins)

30–35% from exports (1–1.5 cent higher margins)

~30–35% price-sensitive exposure

Overseas order share stands at 50–60%, underscoring global positioning. Importantly, customer contracts allow pass-through of cell price volatility.

Financial Acceleration: Earnings Enter Hypergrowth Phase

According to consolidated projections, Waaree’s financial trajectory reflects substantial operating leverage:

FY26 EBITDA growth is projected at 135.5%, with margins expanding to 23.7%. Adjusted EPS is forecast to more than double year-on-year.

Return ratios remain compelling:

FY26E RoE: 34.7%

Net Debt/EBITDA: negative (net cash position)

Interest coverage: 18.4x

Valuations compress meaningfully, with FY26E EV/EBITDA at 11x and FY28E at 7.8x.

SOTP Valuation Framework

Emkay values the core PV business at 14x FY28E EV/EBITDA, supplemented by battery energy storage system (BESS) investments:

The implied valuation multiple of 24.4x target P/E appears reasonable given earnings visibility and global expansion.

Investment View: Structural Winner Amid Policy Flux

Waaree’s diversified sourcing model, aggressive U.S. capacity buildout, upstream integration via Oman polysilicon, and strong order pipeline provide structural insulation from trade disruptions.

While headline risk around U.S. tariffs may generate episodic volatility, the underlying earnings compounding story remains intact. With 57% upside to target price and FY26–28 earnings CAGR in excess of 20%, risk-reward appears skewed favorably.

Emkay’s BUY reiteration reflects conviction that Waaree is transitioning from an export-dependent manufacturer to a globally integrated solar value-chain participant.

Investors should monitor final CVD rulings in July 2026 and U.S. tariff clarifications; however, operational execution thus far suggests the company remains ahead of regulatory curves.