Quoting thesis from X by @InvestIndia6
Let us look at the cheapest Solar stock today
#websol
In short , the co is into PV Module sector for long time, they had obsolete tech so they built everything from scratch in 23-24.
They installed a 600 MW Cell line and a 550 MW Module line. (Module line started from 1st August 24)
Latest AR says that they plan to increase cell capacity to 2.4 GW by FY 27.
Making a cell is much more complex as you have to balance thermal, wet chemistry and Machining process (wafer to cell) all together. That is why the time to establish a cell line is much longer and costly.
So let us look at what #websol is doing and where it is headed.
The co imported
1.46 cr wafers in Q1
1.3 cr wafers in Q2
the unit price per wafer:
Q1: 18.4 Rs.
Q2: 12.9 Rs.
So the raw material wafer price was 30% less in Q2 vs Q1.
But this is not all. As we know that co started making module from 1st August. Since the unit is in SEZ, any stock transfers will also be reported. And just like clockwork, we see the same. #WEBSOL has manufactured 58 lac cells in Aug and Sep.
Now per cell selling price in NON DCR = 99 rs
per cell selling price in DCR= 160 rs
So let's say #WEBSOL is selling every cell as NON DCR which means that its revenue is 57 cr per month for Aug and Sep. This is because their solar cell expense is 19 cr per month so 3x for revenues. (19*3=57)
In Q1 it did 112 cr of revenues so 37 cr per month which can be assumed the same for July 24.
So adding all 3, the revenue for Q2 should be 37+57+57= 150 cr
Now, we know clearly that the co did 20% PAT margins but with input price of wafer down 30%, this PAT margin should expand. Also the margins between wafer and cell and now cell to module will be added.
As per my recent talks with Alpex in REI 24, the PAT margins are 50-70% but I think its ok to consider 30% for now.
So co will do 45 cr of PAT in Q2. Even at same run rate every quarter, the PAT for full year will be 170 cr.
PAT: 170 cr
EPS: 40
Forward PE at CMP= 25 (yes just 25)
All other solar module cos are trading at a much higher PE. But #Websol is not just a solar module co, it is a wafer to module so should command a higher PE than pure play Module cos.
But Wait, why do I assume a flat Revenue per quarter. As i said before, Making a cell means fusing thermal, wet chemistry and machining processes together.
Centrotherm is a leader in the thermal process and what we see from the data that in August and September, #WEBSOL has imported a lot of machinery from Centrotherm. I am not an expert but google search tells me that these machines are required for setting up a solar cell line.
Google search also tells that #WEBSOL has asked for a second 33kv connection. Tender for which was floated in September 24. A second 33KV connection could also mean the same- they are expanding a new cell line.
wbsedcl.in/irj/go/km/docs…
All this put together, for FY25-26, Websol should be able to comfortably do 1.2GW cell and module lines.
That makes them valued at a just a PE of 12 by end of FY26. That is also the time when ALCM (approved list of cell manufacturers) will come likely hence giving even further boost to margins.
Imagine, even on existing setup, I am assuming all the cells go to NON DCR applications. If it goes to DCR applications a 100% then the PE shrinks to just 7.
1.2 GW cell and module line
Cell cost for 1.2 GW monthly- 38 cr
Monthly revenues 190 cr (38*5)
yearly revenues =190*12=2280 crores
PAT: 30% margin or 685 cr
EPS:160
PE at CMP= 1050/160=6.5
Abhi 7 ke PE par kaunsi solar cell/module ki co milti hai| Subscribe To Our Free Newsletter |
