- You can still capture upside as Waaree expands US capacity to 4.2GW by 2026.
- The 126% countervailing duty on Indian‑origin cells won’t hit Waaree because it sources elsewhere.
- Peers relying on Indian cells face margin compression and share price pressure.
- Waaree’s non‑China, non‑India supply chain gives it a defensible moat in a tariff‑heavy environment.
You missed the warning on US solar duties, and Waaree is quietly turning it into a profit catalyst.
Why Waaree’s Diversified Sourcing Neutralizes the 126% Duty Shock
The US Department of Commerce announced a preliminary countervailing duty (CVD) of 126% on solar photovoltaic (PV) imports that trace their cell origin to India, Indonesia and Laos. The headline number looks terrifying, but the duty is applied to the specific component – the solar cell – not to the fully‑assembled module. Waaree Energies’ management clarified that its US‑bound modules are built with cells sourced from countries that face a far lower US duty, typically around 10%.
Because Waaree’s supply chain is deliberately FEOC‑compliant (Foreign‑Entity‑Origin‑Compliant), the company can route its inventory through non‑tariffed origins such as the United States, Malaysia or South Korea. This strategic sourcing decision insulates its margins from the punitive Indian‑cell duty and preserves the profitability of its existing order book.
Impact of the US CVD on Indian Solar Players – A Sector‑Wide View
While Waaree dodges the immediate impact, the broader Indian solar manufacturing ecosystem is not so fortunate. Companies that rely heavily on domestically produced cells – for example, certain tiers of SunPower‑India or smaller module assemblers – will see cost bases swell by double‑digit percentages. The market reaction has already manifested in sharp share price corrections across the sector, with index‑weighted solar stocks slipping 7‑10% in the past week.
For investors, the key takeaway is that the duty creates a bifurcation: firms with diversified, non‑India cell sourcing can continue to chase US contracts, whereas those locked into Indian inputs face a margin squeeze that could force price hikes or order cancellations.
Competitor Landscape: Tata Power Solar, Adani Green Energy and the Duty Fallout
Tata Power Solar and Adani Green Energy, two of India’s largest solar OEMs, have publicly signaled a pivot toward alternate cell sources. Tata has accelerated its partnership with a Taiwanese cell manufacturer, while Adani is fast‑tracking a joint venture in Malaysia to secure low‑duty inputs. Both moves are costly and will take time to scale, leaving a short‑ to medium‑term earnings gap.
Waaree, by contrast, entered the US market earlier and already controls 1 GW of capacity in Arizona (acquired) and is expanding another 1.6 GW in Texas. By mid‑calendar‑year 2026, Waaree’s US footprint is projected to reach roughly 4.2 GW – enough to absorb its current order backlog and capture new utility‑scale projects that are being tendered under the Inflation Reduction Act incentives.
Historical Parallel: 2018 US Solar Tariff Surge and Winners vs Losers
In 2018 the US imposed a 30% tariff on imported solar cells, sparking a wave of restructuring across the global supply chain. Companies that had already diversified their cell sourcing, such as First Solar and Canadian Solar, saw their US margins hold steady and even grew market share. Those that depended on Chinese or Mexican cells faced a steep cost curve and saw share price declines of 15‑20%.
The lesson repeats today: diversified sourcing is a defensive moat. Waaree’s current positioning mirrors the 2018 winners, giving it a strategic advantage that could translate into superior earnings growth as the duty regime solidifies.
Technical Corner: What Is a Countervailing Duty (CVD) and How It’s Calculated?
A countervailing duty is an anti‑subsidy measure levied by a importing country to offset unfair pricing advantages that exporters receive from their home government. The US Commerce Department calculates the duty by comparing the export price of the product to a “normal value” – typically the price of the same product sold in a third‑country market. If the export price is lower, the difference, expressed as a percentage, becomes the CVD. In this case, the 126% figure reflects the department’s assessment that Indian‑origin cells are being subsidized to a degree that would otherwise undercut US manufacturers.
Investor Playbook: Bull and Bear Cases for Waaree Energies
- Bull Case: Continued US expansion, a robust order book, and a fully diversified cell supply chain enable Waaree to capture >15% CAGR in earnings through 2027. The 4.2 GW US capacity acts as a barrier to entry for rivals, while the company’s non‑China, non‑India sourcing keeps margin pressure minimal. Target price rises to Rs 4,260, representing a 25% upside from current levels.
- Bear Case: If the US expands the CVD to cover additional component origins or if Waaree’s alternative suppliers encounter capacity constraints, the company could face unexpected cost spikes. Moreover, a slowdown in US utility‑scale spend, perhaps due to macro‑economic headwinds, would leave Waaree with excess capacity and pressure on pricing.
Overall, the balance of probabilities favors the bullish scenario. Waaree’s proactive supply‑chain architecture and aggressive US capacity build place it in a rare position to thrive amid heightened protectionism. Investors seeking exposure to the fast‑growing solar market should consider Waaree as a high‑conviction, long‑term play.