As Waaree Downplays Impact of fresh US Tariffs, Larger Challenges Loom For market Leader

In a detailed riposte to the news of the fresh US tariffs on solar imports,  Waaree Energies Group Head, Finance, Abhishek Pareek has issued a detailed note on the likely impact and how the firm has ring fenced its operations from such disruptions.

"This is with reference to the recent media announcement by the U.S. Department of Commerce regarding the imposition of preliminary countervailing duties of 126% on certain solar imports from India. The matter remains subject to ongoing regulatory proceedings and the final outcome is expected over next few months.
 
The Company would like to inform that during 9MFY26, it has continued to ramp up its deliveries for U.S. shipments despite the earlier imposition of 50% duty on imports from India. This has been enabled by the alternate and diversified supply chains developed by the Company over the years. The Company’s diversified sourcing strategy remains a core strength, and it continues to further strengthen the same, including through its announced investments in Oman aimed at securing fully traceable, non-Chinese polysilicon supply.
 
In addition, the Company has been progressively strengthening its U.S.-based manufacturing footprint as part of its long-term strategy to support localized production and serve customers in the United States market. As on date, the Company has an aggregate U.S. module manufacturing capacity of approximately 2.6 GW, including capacity acquired pursuant to the acquisition of the Meyer Burger facility. The Company is in the process of further expanding its U.S. manufacturing capacity to approximately 4.2 GW by the end of the current financial year, subject to operational ramp-up timelines and other customary factors.
 
Based on the current order book and internal assessments, the Company expects that its current and planned U.S. manufacturing capacity will substantially support its existing U.S. customer commitments.
 
The Company remains committed to expanding localized manufacturing in the United States along with diversifying its supply chain across geographies to further strengthen our supply chain resilience. At this stage, the Company does not anticipate any material adverse impact on its ability to service its U.S. order book." 

Rising Risks,Lower Valuations?  

While the note from Pareek might have arrested panic for now, as the stock held steady at the time of writing, the matter of rising risks in a market where it pretty much had a free run for the past two years is something investors are keeping an eye on. 
Waaree, like most other solar manufacturing stocks has been under pressure due to fears of overcapacity, ability to ramp up cell production, the threat to export markets from tariffs. While the solar manufacturing industry has managed the domestic environment well with high protection in tariffs as well as non-tariff barriers like the ALMM mandate, the success has created its own challenges. Players have rushed in, putting pressure on managing growth thanks to rising input costs as well as pressure on prices at the same time. With the DCR mandate set to become even more stringent from June this year, it will be a great help for the large players like Waaree, Premier Energies and  Adani Solar and others who have established cell manufacturing. 

But  as supply ramps up, inefficiencies in cell manufacturing will bite. Always a much more complex and demanding process versus module assembly, few players have mastered the process to operate at levels that protects both margins and market share. Consider hjow Vikram Solar has deferred comissioning deadlines for part of its own cell manufacturing plans, forcing it to enter into large offtake deals for the cells fropm domestic specialists like Jupiter International.

Waaree, as the largest module maker in the country has gone all in for backward and forward integration, using the high margins from module sales in the past two years and a large IPO to move into cell, polysilicon (In Oman) production. Other group firms are also expandiong fast in the EPC and related domains.  It has also been the most aggressive in moving into categories like transformers, inverters, transmission, BESS and more, going the inorganic route where required. The firm clearly hopes to be large enough to withstand major market disruptions, but the time to get there without straining its balance sheet will be key. The committed capex to expanding cell production and other investments means  it might have to raise funds at some stage in 2027-28, requiring the firm to keep an eye on market valuations.  For investors, the easy call is to expect no dividends from the solar pack as capex remains centre stage. The tougher one is to get a fix on the firms that will break away from the pack to deliver the kind of quality growth they had become used to.