Waaree Energies Limited (WAAREEENER) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Waaree Energies Limited Q1 FY '27 Earnings Conference Call, hosted by MUFG [indiscernible]. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Irfan from MUFG time. Thank you, and over to you, sir.

Thank you, Nita. Good morning, ladies and gentlemen. I welcome you all for Q1 FY '27 Earnings Conference Call of Waaree Energies Limited. To discuss this process performance we have from the management, Mr. Jignesh Rathod, Whole-Time Director and CEO; Mr. Abhishek Pareek, Chief Financial Officer; Mr. Varun Goenka, President, Growth and Strategy. Before we proceed with this call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For a more detailed disclaimer kindly refer to investor presentation and other filings that we have uploaded on the company's website and stock exchanges. With this for the -- without further ado, I would like to hand over the call to Mr. Jignesh Rathod for his opening remarks. Over to you, sir. Thank you.

Thank you, Erfan. Good morning, everyone, and thank you for joining us in this earnings call. For Q1 FY '27 results were announced yesterday, and I hope you had a chance to go through them. I will share a broad view of the event on our business. and Mr. Pareek, our CFO, will take you to the financial performance in detail. Let me say one thing upfront because it frames everything that follows. Our order book stands at approximately INR 61,500 crores, the highest in our history, up from INR 50,000 crores just a quarter ago, with about INR 16,000 crores in new orders won in this quarter alone. Whatever else we discuss today, that is in markets verdict on Waaree. Let me start with the world around us. The global energy transition is no longer a projection. It is the single largest capacity addition story the power sector has ever seen, and solar seats at the very center of it. At the same time, the solar manufacturing is being tradedrawn in the real time. The U.S.A. and Europe are moving decisively to derisk their supply chains and their policies, interestingly they want suppliers who are [indiscernible] transparent and non-China. Very few companies anywhere in the world can serve that demand with proven skills, bankable quality and clean verified supply chain standing behind every single module. Waaree is one of them. Today, the largest non-Chinese module manufacturer in the world, what rates as straight turbulence in the headlines is for ethistructural tailwinds. At home, the momentum is even stronger. India's energy demand keeps rising with the economy and the Government of India's push for solar insistent, deliberate and long term. From domestic content requirement in LMM to its rooftop program, carrying solar into crores of households. India is at very same time, becoming a serious manufacturing base for the world. Policy, demand and manufacturing depth are all moving in one direction, and that is exactly the direction we have been investing in for years. This is not a cycle we are riding, it's a runway we help build. Against this backdrop, Waaree enters the year on its strongest ever foundation. We carry India's largest module manufacturing capacity in India's largest cell capacity will be once our 10-gigawatt cell line will be up and running. Our backward integration into cells in the esport plant, our manufacturing platform in the United States is growing and our quality is independently validated year after year by the toughest names in the business like RTC, TBL. Our brands today stands for one thing above all, quality and reliability. In the market that is maturing with the customers want a supplier move on the ground, proven and will be there for the life of the asset. And that is precisely why the Waaree brand strengthened visibility again this quarter. And this trust has been earned through the technology leadership, not just a scale. We were first to commercialize flexible modules way back. We were among the earliest anywhere to commercialize 70-plus modules. We build SJT modules made in 2019, years before rest of the industry turned that way. We own world-class laboratory, lets us test, validate and certify to the most demanding global standard in-house on our terms and our time lines. And the ultimate proof is not just the lab report. It is in the field. Over 35 gigawatt of very modules deployed and performing every single day in every kind of [indiscernible] and climate. This is the difference between a vendor and a partner. It is why the customers do not just buy from Waaree once that stays with us. Let me share the key strategic initiative of the quarter. On the capacity, we commissioned an additional 3 gigawatt of module capacity at our SMS plant Samaira, Gujarat in April '26. Waaree Energies Storage Solution commenced the automated best container production at 5.15 gigawatt hours, nearly 1.5x, the 3.5 gigawatt hours we had originally planned. Waaree Transpower commenced commercial production of its 17.6 MBA inverted duty transformer, taking that business from qualification to revenue. WRTL completed the acquisition of an approximately 55% stake in associated power structure for approximately INR 1,225 crores, extending our reach decisively into transmission and distribution and separately on a 1.5 gigawatt. Our best EPC orders and signed the early contractor involvement agreement for utility-scale solar plus best project in Australia and New Zealand market. In the United States, WSA secured a 125 orders of NTT modules, which will be supplied from Arizona plant. This is one more validation of our technology leadership in the market where quality and traceability matters as much as price. These are not isolated wins there are proof points across the capacity storage, transmission EPC and international markets, all moving in the same direction in the same 90 days. The breadth of execution is why our conviction in the coming quarters is not sentiment, it is evidence. I'm pleased to inform you that we are standing the highest ever order book in the history of Waaree, of INR 61,500 crores, two engines items of special manager. Our retail revenue more than doubled this quarter, up 30% year-on-year and our franchise and general partner network widens and deepens, taking Waaree into towns and villages where solar demand is only just beginning, where brand trust alone decide to sell. We expect retail to be INR 10,000 crores business this year. Alongside it, our e-commerce business is scaling fast, reaching households, installers and small businesses directly with the convinced convenience this industry has never offered before. Together, those two engines give us a granular high-quality demand base that is genuinely hard to replicate, and they come with the better realization and deeper, stickier customer relationship. And remember, our cash and carry retail orders are largely not even counted in the INR 61,500 crores order book. This is now the market leader compounds, it leads. Execution-wise, Waaree has consistently delivered its key expansion projects in line with its strategic road map, and I'm glad to report our projects are on time. New cell capacity at [indiscernible] plant is ramping as per plan and expected to be operational within this current financial year. All 10 gigawatt equipments are in our premises now. Our sales to module integration is expected to grew threefold, which contributes directly to the profitability in the coming quarters. Our further backward integration into ingot efforts rises the capital barrier around our position and deepens our competitive advantage. Our new lines in the United States states are expected to begin commercial production in the next few months. Transfer electrolyzer inverter facilities are on track to their stated time lines. Let me fully direct about what did not go our way this quarter. And more importantly, why each of this reverses in the quarters ahead. First, raw material costs was globally driven by the metal indices and price movement out of China, and that compressed margin across our industry, and we were not immune. The structural answer is already running. Our capital cell lines nearly doubled out within the quarter. Every captive cell replaces the purchase one at a meaningful saving. The structural complied cost leadership program is in execution with a dedicated program office. Its first issue are being implemented this quarter, not next year. Second, our export mix was softer, some shipments and clearances took longer than we would have liked. The hardest part is behind us. From August, new U.S. lines also made a growing share of American demand is served from American soil. Third, a portion of our capacity ran ahead of the ready orders since this year's book is weighted into the second half. Where the recovery is contractual, not hopeful. The order book you see in our presentation converts into the confirmed dispatch [indiscernible] that take capacity coverage to near full level throughout the second half. The inventory build in Q1 is mapped into those form schedules. So let me close where I began. The world needs trusted solar manufacturing at scale. India is its natural home and Waaree is India's most proven name in it. Waaree Energies is not really participating into energy transition, we are enabling it, building the manufacturing scale, technology capabilities and integrated well chain needed to accelerate the adoption of clean energy. Our integration across the entire energy value chain, along the structural demand is expected to double our total addressable market from approximately $1 trillion today to approximately $2 trillion by 2030. It is on this trend that we affirmed and reaffirm our 2027 operating EBITDA guidance, what we have stated in our last call, demand tailwinds are strong. Our record order book keeps building of retail and e-commerce engines are compounding, but expansion projects are on field and the actions on cost and mix are in motion, not merely planned. Every quarter, our rapid growth brings its own challenges. This one was an exception. But the direction of this business and the scale of the opportunities in front of us has never been clearer. With that, I will hand over to Mr. Pareek, to take you throughout the financial performance in depth. Thank you so much.

Thank you, Jignesh sir, and good morning to everyone on the call. Let me take you through our quarterly performance in detail with our strategic road map and [indiscernible]. To start with, I would request you all to have your presentation uploaded on Exchange handy. Starting from Slide #4. I'm pleased to share that our Q1 FY '27 consolidated highlights. Revenue from operations for the quarter grew 79.2% year-on-year to INR 7,932-odd crores revenue. Operating EBIDA came in at INR 1,440-odd crores, up 44.4% year-on-year at an operating EBITDA margin of 18.2%. Our profit after tax for the quarter stood at INR 892 crores, up 15.4% year-on-year at a margin of 11%. Our order book stands strong at approximately INR 51,500-odd crores. Our module capacity continues to be at 26 gigawatts, making us the largest non-Chinese model fracture in the world. And our cell manufacturing capacity remains at 5.4 gigawatt. Looking ahead to add another 10 gigawatts over the next 6 months of time, making us the largest cell manufacturers as well outside of China. And on our return ratios, we continue to run a net cash balance sheet with a net debt to equity of minus 0.0x as on 30th of June, and ROCE of 28.5% and ROE of 24.8%. On Slide #5. We look at the quality of our revenue mix. It continues to be healthy and well diversified quarter-on-quarter. In Q1 FY '27 Utility, IPP, C&I contributed around 39.7%, retail 30.2%, overseas 21.2% and EPC [indiscernible] services, 8.9%. Our model volumes sold during the quarter grew 89% over the prior period, from 1.9 gigawatts to 3.6 gigawatts. Within our overseas revenue of our top INR 1,609-odd crores, our domestic U.S. business is approximately INR 1,322 crores, and direct export at INR 287 crores, a direct revision of the ramp-up of our U.S. mantracturing footprint. On retail, specifically, the traction in our B2C segment continues to be very strong. Retail grew 130% year-on-year from INR 995 crores to INR 2,289-odd crores of revenue in this quarter. And we're looking at this segment heading towards a range of INR 9,000 crores to INR 10,000 crores for the full year FY '27. On Slide #6, we look at how we are growing scale while concentrating at the same time. Our revenue mix continues to shift with the utility IPP [indiscernible] share moderating from 52.1% in FY '25 to 39.7% this quarter, retail rising to 30.2% from 20.8% in FY '26. Alongside our customer concentration continues to reduce. Our top 5 customer share has now come down from 33% in FY '26 to around 27.1%. Our top 10 customer sales came down from 47% to around 37.1% in Q1 FY '27. This is a very healthy sign of broadening and derisking customer base. And other than just depending on a handful of large accounts, it supports the stability of both revenue and margin over time. I should also speak of the DCI indication which Waaree is undergoing and is going to play a big growth over the next 2 to 3 quarters for current financial year taking to next financial year as well. On Slide #7, our order book continues to [indiscernible] our total order book has grown from approximately INR 47,000 crores at the end of FY '25 to INR 53,000 crores last financial year and now INR 61,500 crores as on 30th of July 2026, taking a total order book of module in gigawatt terms to 25.2 gigawats. In terms of geographical mix, it is well spread with domestic India at approx domestic U.S. at approximate 36% and exports from India at approximately 24%. And in terms of movement during the quarter, we added net INR 15,000 crores of new orders while executing around INR 7,300 crores of orders. New order inflow comfortably outpaced our execution, which is exactly what you see in a growing franchise. On Slide #8. Now let me walk you through the strong capacity ramp-up that continues to power our growth. Our models in India capacity stands at 24.2 gigawatts running at an annualized utilization of around 50% this quarter. On cell manufacturing in India, installed capacity 5.4 gigawatts running at an annualized utilization of about 62% at quarter level. In the U.S., our model capacity of [ 1.2 gigawatts ] is running at an annualized utilization of around 59%, which expected to move between 75% to 80% in upcoming quarters. This ramp-up in utilization, particularly in cell and in the as is centered to the margin trajectory we are building to us. Since we have meaningful headroom to grow output from these assets we have already built and paid for. If you look at the current rental, we are manufacturing around 400-megawatt plus of cell every passing month, which gives us a headroom of 1,100 to 1,200 megawatt worth of cell output in the current quarter moving towards 15-megawatt plus output over next Q3 and going ahead or above that. On Slide #9, let me walk you through some of our key customer updates from this quarter, company updates on the quarter. On capacity commission, additional 3 gigawatt of more capacity at Sakai in Gujarat in April '26. Energy Storage Solutions, our subsidiary has started automated BESS contained capacity at 5.115 gigawatt hours, Waaree [indiscernible] received approval and started [indiscernible] our EPC and service on body renewable technologies received 1,520 megawatts are our BESS EPC order also signed an ECI agreement for utility-scale Solar PV project with Best in New Zealand. This is in line with the strategy to penetrate newer markets. On the other update, the Waaree group secured its first large-scale, HET order of 125-megawatt under Waaree Americas, Waaree renewable technologies acquired 55% taken associated power solution for up to INR 225-odd crores extending our reach in T&D sector as well. Taken together, these are proof points across capacity, storage, transmission, EPC and international markets. It is exactly this best of execution that gives us the confidence to reaffirm our operating EBITDA guidance of INR 7,000 to INR 7,700 crores over FY '27. On Slide #13. We have already discussed in the previous call about our journey of Waaree [indiscernible] and we will discuss about the progress of this journey in the next couple of slides. On Slide #14, let me walk you through how we deploy capital. because this discipline is what anchors our margin recovery and our margin expansion in the upcoming quarters. Our announced CapEx program totals around INR 31,500 crores of which we have already deployed around INR 9,450-odd crores as of 30th of June. It is sales around 30% in FY '27, roughly 40% in '28 and around 30% in FY '29, which is milestone. ROCE and ROE accretive and backed by strong order visibility. We are not just deploying capital in one large risky way. We are actually pacing it out in the demonstrated market and clear policy visibility. The same deployment is precisely what drives our margin improvement and let me be very specific about it. As our cell capacity comes on stream, or cell production ramp sharply to the year from around 800 megawatts in Q1, FY '27 to around 1.2 gigawatts in Q2, around 1.5 gigawatts in Q3 and over and above in Q4. Model ramp-up of around 3.6 gigawatts [indiscernible] in Q1, and we are expecting this capacity utilization going ahead in Q3 and Q4, reaching in the range of 70 to 75 odd-percentage. This rising captive cell throughput, it moves a progressively larger share of our volumes into higher realization DCR market, which is the the biggest lever on the margin in this year. Alongside our new lines carry the latest, more efficient technology as they ramp up below our unit cost conversion and lift yield in cell manufacturing as well. On Slide #15. Now let me take you through this facing completely by showing you exactly what gets built in each of the next few years because this is what converts the title story into margin story. In FY '27, which absorbs around 30% of overall CapEx, we have added 2.6 gigawatts, we shall be adding 2.3 gigawatts of module capacity in Waaree Americas. 10 gigawatt solar cell capacities in India, under KTPA of TMD EPC is already acquired, 20 GB of transformer capacity, 4 gigawatt of inverter and 1 gigawatt of electrolyzer capacity. All of this coming through loud and clear in FY '27, giving us a great headroom for FY '28 and onwards. FY '28 also captures around 40% of the further incremental CapEx, anchored by 10 gigawatt of [indiscernible]. The product -- the capacity construction has already started in Nagpur in Maharashtra. The deep board integration step, which shall also add up -- which have be followed by solar glass and BESS capacity. FY '29 completed a program with 2,500 tonnes per day of solar glass and 16.5 gigawatts are worth of BESS [indiscernible] bit equivalent capacity of BESS cell, BESS [indiscernible] and BESS containers. So the tenet intent is very clear. They're not just cutting capacity, but we are integrating deeper into the solar value chain and adjacent value chain ahead of demand. [indiscernible] apply security enhances cost competitiveness help us to expand on our margin price positions us to capture larger share of India rapidly expanding solar opportunity and benefits becoming increasingly visible as these capacity ramp up. Slide #17. On solar demand, the long-term outlook is set for sustainable stability. Globally, the animal additions are expected to grow from 690 gigawatt in 2025 to 993 gigawatts by 2025, roughly 4% to 5% CAGR. With global capacity having crossed 3 terawatts already in 2026, India additions are going much faster from 38 gigawatts in '25 to around 100 gigawatts by 2035. A 10% CAGR over the next 10 years. With India adding around 23 gigawatts in first half of this calendar year against 18 gigawatt a year earlier. Energy transition, data center, grid investments are the common drivers on both the sites. Slide #18. On policy, the tailwinds continue to favor integrated local manufacturing. In India the PLI incentive the [indiscernible] and now 3, a 20% custom duty on imports demand schemes like PM, [indiscernible]. All of this supports domestic manufacturing and indication. Globally, in our EUV facilities, the IRA, the [indiscernible] rules combined together driving traceable non-Chinese supply chain for our U.S. clients, which plays directly to our U.S. footprint. While Europe remains a structural opportunity for quality manufacturing outside of China, we are looking towards these markets and looking forward for large order pipeline from Europe, Middle East as well as Australian markets. On Slide #19. If you look at our domestic positioning, we are differentiated by depth of our vertical induration. We already have our largest module capacity outside of China, exactly all of expanding ahead of competition, scale that [indiscernible] as a moat, driving procurement advantages, operating leverages and bankability. Critically, our integration runs from module and cell [indiscernible] and a strategic policy can take an advantage of our holdings in Oman for receivable SUC compliant supply chain. On Slide #20, our cell integration. This is the single large lever for margin expansion in the business in the financial year. As our Indian cell capacity scale up from 5.4 gigawatt current to 15.4 gigawatt against 24.2 gigawatts of module capacity in India. Our cell to module integration ratio is going to rise from roughly around 20% to around 65% in next 2 to 3 quarters, close to a threefold increase. Every gigawatt of module will supply from our own sales rather than buying externally as margins. And the remaining 4 to 6 gigawatts of supply chain of module help us to sale through the export markets, supplying the non-DCI markets or by 2 markets like Europe, Middle East, Africa and Australia. Thank you so much for your continued interest and for being with us on this journey. With that, I would now like to request the operator to open the floor for questions.

[Operator Instructions] The first question is from the line of Vishal from ValueQuest.

So basically, we wanted to understand your expansion plan in a big detail. So what we understood, we are coming up 10 gigawatt of cell and wafer along with batteries. So if you can give some guidance in terms of how to think about when this commissioning will happen? How production ramp-up will happen in FY '28, '29, to understand more long-term journey about Waaree, it will be really helpful.

Yes, Vishal, this is Varun here. Thank you for asking this question. And I know all of us are bound to have questions around this quarter and all that. But I think we shouldn't miss forest for the trees. And it is very important that we understand that at the end of FY '27, Waaree completes a very large portion of the entire CapEx plan. So at the end of FY '27, we will be close to 28 gigawatt of solar module, close to 15.4 gigawatts of solar cell. We will complete our first phase of inverters, 4 gigawatts of inverter and it doesn't stop there. 20,000 MBA of transformers, 1 gigawatt of electrolyzers, so that you know. And this itself provides us a very big step jump in FY '28. So FY '27, you could say is CapEx, working on operating efficiencies. And later during the call, we also shared to what we are working in terms of efficiencies, but '28, if you're talking about close to INR 7,000-odd crores of EBITDA this year as guidance, ballpark, this is when our cell capacity the 10 gigawatt additional includes barely like a gigawatt contribution from there. '28 is when the entire 15.4 gigawatt will be operational. And we could look at close to 10 gigawatts of production from cell. So close to 16-odd gigawatt of module -- 16 to 18 gigawatts of module and 10-odd gigawatt of cell production is what we are looking at in FY '28 as a very big step jump I wouldn't get into realizations. I think that you understand very well. So this is the core module and cell business, and then you have the other equipment, power electronics business plus will also have a big step jump because of the APL cell acquisition, right? But Abhishek, please add. And 29%, of course, we have -- so battery also does drive 5 gigawatt hour goes into full production. The second phase, 16 gigawatt hour is in '29. So let's focus first on '28 and then we can discuss '29.

Understood. And yes, Abhishek you want to say something.

No I just wanted to add that on 10 gigawatt cell capacity, the equipments are already gated into factory also applied for the aluminum for the capacity. So we are beginning to go live on the commercial production as well on that [indiscernible]

Understood. Second question on margins. If you can give some idea of what happened in this particular margin as our gross margin has gone down at the module business level, if you can give us some understanding also.

Yes, Vishal. So to explain it, I think we'll have to look at into different segments. For example, we have impacted around 800 megawatts worth of DCR cell this quarter. Balance of the rails in India includes non-DCR, small component from exports and U.S. local manufacturing. The cell integrated lines continue to show the margin profile of 35% to 40%. The local manufacturing now going up quarter-on-quarter. However, in Q1, a major portion of U.S. dispatches have also come in from the OEM [indiscernible] leading to a lower IRS realization. So in Q2 onwards, when our 1.5 capacity additional in the U.S. goes live, we should add up our ability to generate more higher incentive as well as structurally cut down on our operating cost in the U.S. In India also, the non-DCI market, very element to first came in at the 1st of June, the order came in effective 1st of June. And now that government has given a window of around next 5 to 6 months of time. We are looking at large uptake from the customers. There was a delay in uptake from many developers in this quarter, leading to a lower realization on the on spot market supplies that we have done. However, in Q3 and Q2 and Q3 onwards, we are looking large uptake against those contracts for which we are building the inventory. So this will again structurally land up in a point where we will be able to get benefit of higher realization as well as a benefit from the current spot prices of the cell and other equipments. On [indiscernible] also, this quarter, the facts are softer because the defense in the U.S. took more than required time, then it would generally take. Going ahead, we also from August itself, again, starting our export supplies from Indian facilities. So this should also add up to the revenue profile and the margin [indiscernible]. In terms of DCR also, as I mentioned earlier, that 800-megawatt capacity production of DCR in Q1, expected to go up from [indiscernible] in Q2 and moving towards 0.5 gigawatts quarterly trajectory, going ahead from Q3 and Q4 would be a little higher. So these are 3 to 4 levers is the most important is DCR production. Second is the U.S. local production scaling up with the new capacity 1.6 gigawatt. Third is exporting exports starting off from and for the non-DCI market offtake going to increase from Q2 onwards with the 6-month window. By that time, we land up in December until which the extension is live we should also be having start off with our facility of 10 gigawatt at in Gujarat solar cell manufacturing, which should give us complete integration of module with the cell capacity for Indian markets. And that is where the structural change of margin happens. Understood.

And last question from my side. So our current 5.4 gigawatts of cell capacity for which G12R conversion was going on. I think that we have already completed and our ramp-up already started in the month of June and July also, we can see. So how we can see the production numbers from this particular facility, if you can give some idea?

As I mentioned just now that from the same facility they are already starting to see around 400 megawatts of monthly production. Going ahead, this can go between 420 to 430 megawatts of monthly production, leading to a quarterly of around 1.3 to 1.4 gigawatts from the same facility. On top of it, the 10-gigawatt facility should start adding up from Q3 itself.

The next question is from the line of [indiscernible] from UBS.

My first question was, could you help us with the module realizations across the DCR and non-DCR and exports for this quarter? And next would be like, while we understand that Q1 was the first quarter where we have seen a meaningful ramp up in the module manufacturer in the U.S., going ahead, how should we think about the profitability in the U.S. operations and also the cash flow from operations for this quarter?

Yes. So if you look at the realizations across the DCR and non-DCR and export market, the export market, whatever we have exported, the realization is between [ $0.25 to $0.26 per market ] basis. The DCR market continues to sell across $0.20 $0.25 per [indiscernible] basis on derivation terms. The non-DCR market, we are additions continue to range between $0.13 to $0.14 per watt week. In terms of the cash flow, like quarter 1 itself, our operating cash flow has been far better because of control inventory has continued. Our production also now moving to a scenario where in the uptake has started happening from the non-diesel community, which was a little softer in Q1. With the extension of 6 months for the Non-DCR market we are starting to see larger uptake starting from Q2.

The next question is from the line of Kunal Shah from DAM Capital.

Yes, sir, a lot of clarification. Just wanted to understand, post the tariff implementation by U.S. commentary was around that the business, the export business would remain unaffected as you sort of procure some nontariff nations and sort of service that piece of order book, yet the revenues today are like 1/3 on a Y-o-Y basis, right? So you did give some clarity that [indiscernible] took more time, but what gives us the confidence that, that would be expedited going ahead? And just a related question here is, today, 25% of our order book is U.S. exports. Like again, what is the confidence to sort of service this piece and at what margins?

Thank you for that question. If you look at the overall exports in terms of megawatts, it's lower compared to previous quarters. But the good news here is that our 1.3-gigawatt local capacity in the U.S. is ramping up and catching up soon. This gives us confidence that the dispatches to our local use clients can continue to have the [indiscernible] facility. Also, in terms of the wider supply chain that we have been able to adopt, we have been able to now start shipments to U.S. markets from Q2 itself. Since delivered some orders leading to a delay in supplies across the U.S. markets and with the newer supply chains that we've been able to tap in, our dispatches are now going to start from Q2 itself.

Just to add here, if you track the U.S. market, there was a lull for 6 months in terms of installations because of a lot of tariff confusion developers and utilities we're trying to wait it out before -- you see recently Waaree itself has gone a lot of orders in the last few weeks itself, you'll suddenly find either related to data centers or otherwise other alternate sources of energy have very long backlogs, long lead times. So the focus is again shifted back to solar plus BESS. So again, order flows and interest and inquiries in U.S. have significantly gone up.

Understood. And just one, if I could squeeze in. The module production that has sort of declined to 3.2 gigawatts this quarter versus [indiscernible] last quarter, this decline, would it be largely putable to the domestic non-DCR market? And is that the piece that has been under margin pressure during the quarter? I mean would that be right to assume?

Like offtake by the clients in India certainly has got deferred by a quarter, leading to lower uptake in this quarter. Also comparatively lower export in these particular quarters to lower optics. But the important point here to understand is from quarter 3 onwards, our cell integration is going up from around 20% currently to around 55-odd percent. This is more than sufficient overall domestic market and suppliers that we've been doing. I'll just try to compete. Also the 6-month extension by the government of the non-DCR market gives us the confidence that the uptake is now going to ramp starting from next month.

The next question is from the line of Sahil Shi from Anand Rathi Institutional Equities.

This is Shweta here. Sir, I wanted to carandthe margin profile for the U.S. business. One is when you're exporting it from India? And the second is when we are actually manufacturing in the U.S. and then selling it there? And the second is the Retail segment that you are operating in India.

Sure, Shweta. Like if you look at the pure-play exports market, in terms of the answer [indiscernible], around $0.25, you say realization on a standalone basis against that $0.04 to $0.05 worth of EBITDA margin or margin is good number to assume. In terms of the local manufacturing in the U.S. to the similar set of customers, the -- there are 2 points. One is the margin from the operation, which with the new capacity in the U.S. is bound to go up ready as well as there is $0.07 per outtake of incremental derivation under the U.S. IT program. Put together around $0.07 to $0.08 of margin per both basis in U.S. from local U.S. facility is a reasonable assumption against $0.04 to $0.05 of exports from India.

So to the benefit that's adding up to the margin then?

Yes. So out of 7, there are expenses that has to be bond while you get the net reelection around [ $0.055 to $0.06 ] only and balance is the operating margin. But when you see 1.3 gigawatt of new capacity leverage, our structural cost of $0.06 per attic of conversion and US is expected to cut down by $0.01 to $0.02, which will give us an additional full in the margin profile for the uses local manufacturing. That means our overall realization of net EBITDA margin from U.S. specific temperate somewhere between [indiscernible].

The next question is from the line of Praveen Sahay from PL Capital.

My only question is related to the sale pricing. If you can give the imported cell price versus the local India manufacturers cell prices currently.

If you look at the current input price of around [ $0.04 to $0.45 ] in local markets, our manufacturing cost is around $0.07 to $0.08 and the market pricing in terms of the DCR market is around [indiscernible]

The next question is from the line of Sabri Hazarika from Emkay Global.

Just wanted to get some color on the ESS business. How much volumes you are expecting this year or any full contribution from the same?

Thanks for the question. If you look at the 5.15 gigawatt worth of container line, which has gone live this year, we are starting to add up our order book as well. In FY '27, '28, we are looking at reasonable output from this facility because we are also adding 3.5 gigawatt of BESS cell in current financial year and 5.15 gigawatt of BESS capacity. So that we integrate our entire BESS facility within 3.5 gigawatt out of cell and 5.15 gigawatt [indiscernible] is going to start the dispatches. We are starting to see the commercial supplies from starting from this quarter itself. And we have already started to build our order book as well for the energy storage projects. We are not just limiting our markets to domestic. In fact, there's a large traction from the overseas market as well, like the large set of markets as which is asking for [indiscernible] supply chain. Also, the market from Europe, they are asking for non-Chinese supply chain for larger orders to supply for Recently, the subsidy has recently entered Indonesia agreement to supply large-scale projects delivered with BESS in New Zealand and Australia. That also gives us confidence that this market has -- in terms of the market diversification has larger markets to serve for apart from India, Europe, Australian New Zealand markets seem to add up a lot for our BESS optics.

The next question is from the line of Suyash Kela from Singularity AMC.

First of all, thank you for the disclosures incrementally that you're doing as being a lot of clarity as we are understanding the business a little bit better. If you can talk about the planned QIP? What was the strategy behind it? What kind of amount is actually needed, which is the requirements of the business and what are more methods of strengthening the balance sheet? That understanding will be very helpful.

Suresh, if you look at the approval that we have taken from Board and shareholders to have around INR 10,000 crores of funds raised through various channels, [indiscernible]. Right now, our balance sheet stands at around INR 7,000 crores worth of cash level as of 30th of June. Our this year CapEx outflow is around 30-odd percent. Majority of portion has already happened. And over the next 2 to 3 quarters, we'll have incremental outlook. Our total balance CapEx of INR 22,000 crores over the next 3 years, if we dissect it year-on-year level, around 40% is happening in FY 28 and around 30% balances happening in FY '29. Our own EBITDA guidance which we have given in start of this year is broadly sufficient for these projects. However, in order to strengthen our balance sheet, we continue to look out and or the right time to hit the market in terms of the approvals that we look in for the QIP.

The next question is from the line of Nirmal from Aditya Birla SunLife.